Underlying strength and good growth prospects make Popular, Inc. (BPOP - Free Report) a solid bet now. The company’s Zacks Consensus Estimate for the current-year earnings has been revised 1.3% upward over the last 60 days, indicating analysts’ optimism about its earnings growth potential.
As a result, the stock currently carries a Zacks Rank #2 (Buy).
The stock has gained 4.4% in a year’s time, underperforming the 31.3% growth for the industry it belongs to. Nevertheless, given the positive estimate revisions and a solid Zacks Rank, we expect the price performance to improve in the near term.
Here are a few factors that make the stock a viable investment option.
Earnings per Share (EPS) Growth: In the past three-five years, Popular witnessed EPS growth of 12.2%, marginally higher than the industry average of 12.1%. This earnings momentum is likely to continue in the near term, as reflected by the company’s projected EPS growth of nearly 11% and 7% for 2017 and 2018, respectively.
Also, the company has an impressive earnings surprise history. It surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average beat being 2.3%.
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 the company’s financially stability 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 P/E (F1) ratio of 10.41 compared with the industry average of 17.69. Moreover, the company’s P/B ratio of 0.78 is below the industry average of 1.42.
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 (Strong Buy) or 2, offer the best upside potential.
Other Stocks Worth a Look
A few other top-ranked stocks in the same space are Carolina Financial Corporation (CARO - Free Report) , Synovus Financial Corp. (SNV - Free Report) and Trustmark Corporation (TRMK - Free Report) .
Carolina Financialhas witnessed an upward earnings estimate revision of 4.3% for the current year over the past 60 days. Its share price has increased a shade more than 55% in the past year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Synovus Financial’s Zacks Consensus Estimate for the current year has been marginally revised upward in the last 60 days. Its shares have gained nearly 35% in the past 12 months. It carries a Zacks Rank #2.
Trustmark Corporation also carries a Zacks Rank #2. The stock has witnessed a downward earnings estimate revision of 1.7% for the current year over the past 60 days. Its share price has increased nearly 13% in a year’s time.
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