5 Reasons to Add Popular (BPOP) Stock to Your Portfolio Now
Popular, Inc. BPOP stock seems like an attractive investment option now. The company’s impressive organic growth trajectory, its strong fundamentals and capital strength are expected to drive the stock.
Analysts seem optimistic regarding the company’s earnings growth prospects. Over the past 60 days, the Zacks Consensus Estimate for BPOP’s current-year earnings has been revised 10.5% upward. Thus, the company currently carries a Zacks Rank #2 (Buy).
Looking at its price performance, over the past three months, shares of BPOP have gained 26.3% compared with the industry’s growth of 24%.
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Here are a few other factors that make the stock a viable investment option now.
Earnings Per Share (EPS) Growth: In the last three-five years, BPOP witnessed EPS growth of 30%, higher than the industry average of 10.2%. While the company’s earnings are projected to decline 45.9% in 2023, the trend will reverse after that. In 2024, the company’s earnings are expected to rise 19.2%.
BPOP has an impressive earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 46.6%.
Revenue Strength: Popular’s revenues have witnessed a CAGR of 9.8% over the past five years (2017-2022), with the uptrend continuing in the first six months of 2023.
While the company’s revenues are projected to decline 9.5% in 2023, the metric will likely grow 7.4% in 2024. The company’s efforts to grow fee income, along with a robust loan balance and higher interest rates, will support the top line in the near term.
Strong Leverage: Popular’s debt/equity ratio, which stands at 0.00, indicates that the company doesn’t use long-term debt to finance its operations. However, the industry’s debt/equity ratio stands at 0.31 currently. This reflects the company’s financial stability, even in adverse economic conditions.
Superior Return on Equity (ROE): Popular has an ROE of 23.65%, which is higher than the industry’s ROE of 11.86%. This reflects that the company reinvests its cash more efficiently than its peers.
Favorable Valuation: The BPOP stock is undervalued compared with the broader industry. Its current price/cash flow (P/CF) and price/earnings (P/E) ratios are lower than the industry averages. It has a P/CF ratio of 4.26, lower than the industry’s 7.78. Its P/E (F1) ratio of 8.87 compares favorably with the industry’s 10.25.
Other Stocks to Consider
A couple of other top-ranked stocks from the same space are Trustmark Corporation TRMK and First Community Bankshares, Inc. FCBC. TRMK and FCBC currently carry a Zacks Rank of 2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Earnings estimates for TRMK for 2023 have been revised 12.3% upward over the past 60 days. In the past three months, TRMK’s shares have gained 20.9%.
Earnings estimates for First Community Bankshares have been revised 1.1% north for 2023 over the past 60 days. Shares of FCBC have rallied 37.3% in the past three months.
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Popular, Inc. (BPOP) : Free Stock Analysis Report
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