The rotational instability almost always appears in dynamically formed field-reversed configurations (FRC). It generally appears as an m=2 mode (azimuthal mode number). Driven by the gravitylike centrifugal effect in rotating plasmas, it is akin to a gravitational mode. On the other hand, translated FRCs often do not exhibit this instability. A recent analysis [H. Y. Guo et al., Phys. Rev. Lett. 95, 17001 (2005)] suggested that magnetic shear effects associated with a modest toroidal field can stabilize it. Here the stabilizing effect of a modest toroidal field is investigated numerically using the NIMROD code [C. R. Sovinec et al., J. Comput. Phys. 195, 355 (2004)] and analytically using the modified energy principle. The analysis predicts the growth rate as a function of toroidal field strength, as well as a stability condition. The three-dimensional numerical calculations are in basic agreement with the analysis, although complete stability is not predicted due to the appearance of a distinct mode structure that persists in the open field-line region.