Rating Change #4
Popular Inc (BPOP) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
Highlights from the ratings report include:
- POPULAR INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, POPULAR INC turned its bottom line around by earning $0.15 versus -$0.15 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus $0.15).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 101.3% when compared to the same quarter one year prior, rising from -$227.14 million to $2.98 million.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.0%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, POPULAR INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- BPOP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 27.00%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
Popular, Inc., through its subsidiaries, provides a range of retail and commercial banking products and services primarily to corporate clients, small and middle size businesses, and retail clients in Puerto Rico and Mainland United States. The company has a P/E ratio of 15.6, below the S&P 500 P/E ratio of 17.7. Popular has a market cap of $1.65 billion and is part of the financial sector and banking industry. Shares are up 57.6% year to date as of the close of trading on Friday.You can view the full Popular Ratings Report or get investment ideas from our investment research center.
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