Popular stock triggered by recent performance trends

Popular (BPOP) has attracted fresh attention after a period in which the stock rose about 46% over the past year and about 163% over the past 3 years, alongside positive annual revenue and net income growth.

Short term share price returns for Popular have eased slightly, with the stock down around 1% over the past week, but the 1-year total shareholder return of 46.16% and 3-year total shareholder return of 163.13% point to strong momentum that has built over time around improving business results and shifting risk perceptions at a recent share price of $148.53.

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With Popular’s recent share price strength, reported annual revenue of about $3.0b and net income of roughly $899.9m, the key question now is whether the stock is still undervalued or if the market is already pricing in future growth.

Most Popular Narrative: 13.3% Undervalued

Popular’s last close at $148.53 sits below a narrative fair value of $171.22, which raises an obvious question about what is driving that gap.

Ongoing investments in digital infrastructure, including the launch of a new digital platform for commercial cash management and branch modernization, are expected to improve operational efficiency, customer growth, and long-term revenue and margin expansion.

Curious what has to happen for that higher value to make sense? Revenue growth, profitability and the earnings multiple all need to line up in a specific way.

Result: Fair Value of $171.22 (UNDERVALUED)

However, this hinges on Popular managing risks, such as its heavy Puerto Rico exposure and competition for deposits that could pressure funding costs and credit quality.

Next Steps

With mixed signals on value, growth, and risk, the next move is yours. Review the full breakdown of potential upsides and concerns with 5 key rewards and 1 important warning sign

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.