Popular Hits 52-Week High: Should You Buy BPOP Stock Now?

Popular, Inc. BPOP shares touched a 52-week high of $107.15 during Monday’s trading session. Over the past six months, BPOP shares have risen 10.6%, surpassing both its industry and close peers, F.N.B. Corporation FNB and Pinnacle Financial Partners PNFP.

Six-month Price Performance

Factors Driving Popular Stock

Steady Organic Growth and Loan Expansion: Popular has demonstrated healthy organic growth over the past few years, supported by a rising trend in loan and deposit volumes. From 2020 to 2024, the company achieved a four-year compound annual growth rate (CAGR) of 5.6% in revenues. This was mirrored by a 6.8% CAGR in net loans and a 3.4% increase in total deposits during the same timeframe. In the first quarter of 2025, the uptrend continued for revenues, loans and deposits. These trends reflect the strength of Popular’s banking operations in its core geographies and underscore its well-established retail and commercial banking franchise.

Sales Estimate

Solid Net Interest Income and Expanding Margins: Net interest income (NII) continues to be a significant contributor to Popular’s revenue stability. Over the 2020–2024 period, NII grew at a CAGR of 5.3%, reflecting sustained expansion in loan balances and improved asset yields. The momentum continued in the first three months of 2025. Additionally, net interest margin (NIM) also showed consistent expansion, rising from 2.88% in 2021 to 3.24% in 2024, and further strengthening to 3.40% in the first quarter of 2025. Looking ahead, management expects additional improvement in both NII and NIM as loans are repriced and deposit costs decline. The prospect of Federal Reserve rate cuts in the second half of 2025 is also likely to support Popular’s NIM.

Transformation Initiatives: Since launching its multi-year transformation program in 2022, BPOP has channeled capital into strategic acquisitions and technology upgrades to improve efficiency and client experience. Key steps included acquiring customer channels from Evertec in 2022 and investing $300 million in technology infrastructure in 2023. These initiatives are aimed at accelerating digital innovation while enhancing internal processes. Through these efforts, the company is targeting a return on tangible common equity of 14% by the end of 2025, a level that reflects improved profitability through operational agility.

Robust Liquidity Position: The company’s balance sheet remains healthy, supported by a liquidity position of $6.6 billion as of March 2025. Total debt is limited to $1.4 billion, suggesting low refinancing risk even in a challenging macro environment. In terms of capital distributions, the company raised its quarterly dividend by 12.9% to $0.70 per share in late 2024. In the past five years, it has hiked its dividend four times, with annualized dividend growth of 12.86%.

BPOP also initiated a $500 million share repurchase program in August 2024, with $160 million remaining available as of March 31, 2025.

Attractive Return on Equity (ROE): BPOP’s profitability metrics compare favorably to those of its peers. The company’s trailing 12-month return on equity stood at 12.22%, outpacing the industry average of 9.74%.

In comparison, F.N.B. has a ROE of 7.97%, while Pinnacle Financial Partners’ ROE stands at 9.29%. This higher ROE is a testament to Popular’s ability to deploy capital efficiently and underscores its long-term value creation potential for investors.

Few Headwinds Prevail for BPOP Stock

Elevated Operating Costs: Popular’s expense base remains a concern, registering a 6.7% CAGR from 2020 to 2024 due to technology investments, personnel expenses, and branch expansion. Although the first quarter of 2025 saw a slight decline, expenses are expected to stay elevated in the near term due to ongoing digital infrastructure upgrades, regulatory compliance measures, and increased compensation expenses.

Asset Quality Challenges: BPOP’s credit profile continues to face pressure. Nearly 50% of its total loan portfolio is concentrated in commercial loans, which are more vulnerable in a weakening economic environment. While provision for credit losses declined in 2021 and the first quarter of 2025, the metric increased in 2020, 2022, 2023, and 2024 as the company continued to build reserves to combat the tough operating environment. Provisions are likely to remain elevated given the ongoing economic uncertainty and expectation of subdued economic growth.

Does BPOP Stock Deserve a Place in Your Portfolio?

Analysts are bullish on BPOP stock. Over the past month, the Zacks Consensus Estimate for earnings for 2025 and 2026 has been revised 1.2% and 4.6% upward, respectively. The projected figures imply growth of 17.1% for 2025 and 20% for 2026.

Earnings Estimate

From a valuation standpoint, BPOP appears inexpensive relative to the industry, trading at a P/E (F1) multiple of 10.04X compared to the industry average of 11.1X.

Price-to-Earnings

Meanwhile, F.N.B. holds a P/E (F1) of 10.03X, while Pinnacle Financial Partners’ P/E (F1) stands at 14.01X.

Though Popular faces challenges including weakening asset quality and rising expenses, solid top-line growth driven by solid loans and deposit balance, relatively higher rates and efforts to expand through buyouts and technology upgrades will support its prospects. Further, bullish analyst sentiments and cheap valuation make the stock an attractive investment option.

At present, BPOP sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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