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3 Reasons Why Popular (BPOP) Stock is a Solid Pick Now

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Improving operating environment, expectations of lesser regulations and the Fed rate hikes should keep supporting the performance of bank stocks. Keeping this in mind, we bring to you Popular, Inc. BPOP, which is a solid pick now based on its strong fundamentals.

Although shares of this company increased 22.1% in the last one year, underperforming the Zacks categorized Southeast Banks industry’s rally of 33.5%, its earnings estimates have been trending higher, reflecting analysts’ optimism.

For the current year, its earnings estimates have been revised 1.9% upward, in the last 60 days. This should lead to solid price performance in the near term.

Popular, Inc. currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Driving Factors

Earnings per Share Growth: In the last 3–5 year period, Popular witnessed EPS growth of 25.3%, higher than the industry average of 11.6%. The company has a decent earnings surprise history, having delivered positive surprises in three of the trailing four quarters with an average beat of 2.7%.  

Further, the company’s earnings are projected to grow 7.2% and 6.2% in 2017 and 2018, respectively.

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 0.31. This reflects that the company will be financially stable even in adverse economic conditions.

Stock Looks Undervalued: Popular stock looks undervalued with respect to its price-to-earnings (P/E) and price-to-book (P/B) ratios. It has a forward P/E ratio of 10.03, compared with the industry average of 17.32. Moreover, the company’s P/B ratio of 0.74 is below the industry average of 1.41.

Popular, Inc. has a Value Score of ‘B’. The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of ‘A’ or ‘B,’ when combined with a Zacks Rank #1 or 2, offer the best upside potential.

Other Stocks Worth a Look

Some other stocks worth considering in the finance space are Citizens Financial Group, Inc. CFG, Carolina Financial Corporation CARO and Northern Trust Corporation (NTRS - Free Report) .

Citizens Financial witnessed an upward earnings estimate revision of nearly 7% for the current year, in the last 60 days. Its share price increased 49.1% in the last one year. It currently carries a Zacks Rank #1.

Carolina Financial carries a Zacks Rank #2. For the current year, in the last 60 days, its Zacks Consensus Estimate was revised 2.3% upward. Its share price increased 78.9% in the last one year.

Northern Trust also carries a Zacks Rank #2. It witnessed an upward earnings estimate revision of 2.6% for the current year, in the last 60 days. Its share price increased 23.1% in the last one year.

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