Popular Inc Upped to Strong Buy

On Mar 6, Zacks Investment Research upgraded Popular, Inc. ( BPOP - Snapshot Report ) to Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Popular Inc has been witnessing rising earnings estimates owing to strong fourth quarter 2012 results and announcement of balance sheet restructuring initiative. Moreover, this regional bank delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 42.3%.

Popular Inc reported fourth-quarter results on Jan 24. Earnings came in at 81 cents per share, surpassing the Zacks Consensus Estimate of 51 cents by 58.8% and significantly outpacing the year-ago earnings of 2 cents. Results were primarily aided by a solid improvement in net interest income and a fall in expenses, partially offset by a decline in fee income.

Net interest income inched up 1.6% year over year to $350.4 million. Yet, non-interest income declined 11.0% to $133.0 million. Operating expenses fell 4.6% year over year to $296.7 million.

Further on Mar 1, Popular Inc. announced that its main banking subsidiary – Banco Popular de Puerto Rico – has entered into a definitive agreement to sell a portfolio of certain non-performing loans with an aggregate unpaid principal balance of about $1.0 billion. The deal was signed with a firm, majority of which is owned by a joint venture between Caribbean Property Group LLC and certain affiliated funds of Perella Weinberg Partners Asset Based Value Strategy.

The Zacks Consensus Estimate for 2013 increased 5.1% to $2.47 per share as 2 of the 3 estimates were revised higher over the last 60 days. For 2014, all 3 estimates were revised up over the same time frame, lifting the Zacks Consensus Estimate by 7.6% to $2.98 per share.

Other Stocks to Consider

Besides Popular Inc, other southeast banks like Access National Corp. ( ANCX - Snapshot Report ) , BNC Bancorp ( BNCN - Snapshot Report ) and Capital City Bank Group Inc. ( CCBG - Snapshot Report ) carry a Zacks Rank #1 and are worth considering.