It seems to be a wise idea to invest in Popular, Inc. BPOP stock now, given its strong fundamentals and good growth prospects. Moreover, it has been witnessing positive estimate revisions of late, reflecting analysts’ optimism regarding its earnings growth potential.
The Zacks Consensus Estimate for the company’s current-year earnings has been revised nearly 7% upward over the past 60 days. Thus, the stock currently carries a Zacks Rank #2 (Buy).
Popular’s price performance also looks impressive. The stock has gained 14% in the past year against 16.2% decline recorded by the industry it belongs to.
Here are a few other factors that make the stock a viable investment option.
Earnings per Share (EPS) Growth: In the last three-five years, the company witnessed EPS growth of 6.5%. This earnings momentum is likely to continue in the near term, as reflected by the company’s projected EPS growth rate of 38.2% and 7.7% for 2019 and 2020, respectively.
Moreover, it has an impressive earnings surprise history. The company surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average beat being 10.4%.
Revenue Strength: Popular’s revenues have witnessed a CAGR of 7.3% over the past five years (2014-2018). Moreover, the company’s projected sales growth rates of 3.2% for 2019 and 2.5% for 2020 ensure the continuation of the uptrend in revenues.
Strong Leverage: Popular’s debt/equity ratio, which stands at 0.00, indicates that the company uses no debt to finance its operations. On the other hand, the industry’s debt/equity ratio stands at 0.21 currently. This reflects the company’s financial stability, even in adverse economic conditions.
Superior Return on Equity (ROE): Popular has an ROE of 10.58%, which is higher than the industry’s ROE of 9.93%. This reflects that the company reinvests its cash more efficiently than its peers.
Stock Looks Undervalued: Popular stock looks undervalued right now, with respect to its price-to-earnings (P/E) and price-to-book (P/B) ratios. It has a P/E (F1) ratio of 8.10 compared with the industry average of 11.92. Moreover, the company’s P/B ratio of 0.96 is below the industry average of 1.18.
Other Key Picks
A few other top-ranked stocks from the same space are Hilltop Holdings Inc. HTH, Cadence Bancorporation CADE and First Bancorp FBNC. Each of these currently has a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past 60 days, Hilltop Holdings has witnessed an upward earnings estimate revision of 11.5% for the current year. Its share price has increased 13.9% in the past six months.
Cadence Bancorporation’s Zacks Consensus Estimate for the current year has been revised 8.3% upward over the past 60 days. Its shares have gained nearly 2.5% in the past six months.
Over the past 60 days, First Bancorp has witnessed an upward earnings estimate revision of 3% for the current year. Its share price has increased 4.8% in the past six months.
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