Popular (BPOP) Is Water-Logged And Getting Wetter Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Popular ( BPOP) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Popular as such a stock due to the following factors:

  • BPOP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.1 million.
  • BPOP has traded 1.4 million shares today.
  • BPOP traded in a range 223.7% of the normal price range with a price range of $1.98.
  • BPOP traded below its daily resistance level (quality: 255 days, meaning that the stock is crossing a resistance level set by the last 255 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on BPOP:

Popular, Inc., through its subsidiaries, provides various retail and commercial banking products and services primarily to institutional and retail customers. The company accepts various deposit products. Currently there is 1 analyst that rates Popular a buy, 1 analyst rates it a sell, and none rate it a hold.

The average volume for Popular has been 824,100 shares per day over the past 30 days. Popular has a market cap of $3.4 billion and is part of the financial sector and banking industry. The stock has a beta of 1.59 and a short float of 1.5% with 1.16 days to cover. Shares are down 13.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Popular as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The gross profit margin for POPULAR INC is currently very high, coming in at 82.80%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, BPOP's net profit margin of 14.80% significantly trails the industry average.
  • POPULAR INC has improved earnings per share by 10.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, POPULAR INC swung to a loss, reporting -$1.88 versus $5.49 in the prior year. This year, the market expects an improvement in earnings ($3.37 versus -$1.88).
  • BPOP, with its decline in revenue, slightly underperformed the industry average of 0.0%. Since the same quarter one year prior, revenues slightly dropped by 1.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has significantly decreased to -$9.83 million or 106.14% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Commercial Banks industry and the overall market, POPULAR INC's return on equity significantly trails that of both the industry average and the S&P 500.

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