Here's What Makes Popular Stock a Solid Investment Option Now
Popular, Inc. BPOP is gaining from revenue stability, net interest income (NII) growth, a strong liquidity profile, and consistent capital distributions.
Analysts seem optimistic regarding the company's earnings growth prospects. Over the past 60 days, the Zacks Consensus Estimate for BPOP's earnings has been revised upward for 2025 and 2026.
Estimate Revision Trend
Image Source: Zacks Investment Research
Solid Organic Growth: The company continues to make steady progress toward improving its top line. The company's total revenues have witnessed a compound annual growth rate (CAGR) of 5.6% over the past four years (2020–2024). Further, net loans grew at a four-year CAGR of 6.8%, and deposits saw a CAGR of 3.4% during the same period.
In the first quarter of 2025, the trend of revenue, loans, and deposits continued to increase on a year-over-year basis. Thus, BPOP's strong loan pipeline and healthy deposit base position it well for continued organic growth.
Rising NII & NIM: Popular's NII witnessed a four-year (ended 2024) CAGR of 5.3%. The NIM rose to 3.24% in 2024 from 3.13% in 2023, up from 3.11% in 2022 and 2.88% in 2021. Both NII and NIM increased year over year in the first quarter of 2025.
Looking ahead, management anticipates seeing continued growth in NII and NIM, driven by the repricing of its investment portfolio and new loan originations and lower deposit costs. Furthermore, with the Federal Reserve expected interest rate cuts this year, Popular is poised to benefit from additional improvements in NII and NIM in the coming period. For full-year 2025, management expects NII to increase 7–9% from the reported 2024 level.
Earnings Strength: In the last three to five years, BPOP witnessed EPS growth of 6.05%, higher than the industry average of 5.27%. Further, the company's earnings are expected to show an upswing in the near term, as its projected EPS growth rate is 17.11% compared with the industry average rate of 14.07% in 2025.
Apart from this, BPOP has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 11.82%.
Specifically, for 2025 and 2026, its earnings are estimated to rise 17.11% and 19.97%, respectively.
Earnings Estimates
Image Source: Zacks Investment Research
Strategic Initiatives: Popular launched a multi-year transformation initiative in 2022 to address evolving client needs and maintain competitiveness. The company focused on investing in its tech infrastructure and adopting agile practices to enhance the digital client experience, streamline employee processes, and drive efficiency and profitability.
As part of this effort, BPOP acquired key customer channels from Evertec in 2022 to accelerate digital transformation. In 2023, it invested $300 million in technology infrastructure to support secure and innovative digital banking platforms. Through these efforts, Popular is targeting a return on tangible common equity (ROTCE) of 14% by 2025.
Strong Liquidity Position: The company maintains a solid liquidity profile. As of March 31, 2025, the company's liquidity stood at $6.6 billion. Its total debt aggregated to $1.4 billion, maintaining a conservative balance sheet.
Given substantial liquidity, we believe that Popular is not likely to face problems repaying its borrowings in the near term, even if the economic situation worsens.
Impressive Capital Distribution: Popular continues to return value to shareholders through dividends and buybacks. In November 2024, the company increased its quarterly dividend by 12.9% to 70 cents per share.
The company has increased its dividend four times in the past five years, with a 29% dividend payout ratio. It has a current dividend yield of 2.6%.
In addition, it has a share repurchase program. In August 2024, the company announced a $500 million share repurchase authorization. As of March 31, 2025, $160 million shares were available under this authorization.
Given the favorable payout ratio and solid liquidity, such capital distribution activities seem sustainable.
Over the past year, shares of BPOP have gained 25.1% compared with the industry's growth of 16.2%.
One Year Price Performance
Image Source: Zacks Investment Research
Currently, the company sports a Zacks Rank #1 (Strong Buy).
Other Stocks to Consider
Some other top-ranked stocks in the same space are United Bankshares UBSI and First BanCorp. FBP, each flaunting a Zacks Rank of 1. You can see the complete list of today's Zacks #1 Rank stocks here.
United Bankshares's earnings estimates have been unchanged at $2.97 per share over the past 30 days. UBSI's share price has increased 15.1% over the past year.
FBP's earnings estimates have been unchanged at $1.93 per share over the past 30 days. Its share price has increased 13.4% during the same period.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Popular, Inc. (BPOP) : Free Stock Analysis Report
United Bankshares, Inc. (UBSI) : Free Stock Analysis Report
First BanCorp. (FBP) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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