Popular (BPOP) Stock in Focus: Strong Earnings and Capital Returns Fuel Valuation Debate

Popular, Inc. (NASDAQ: BPOP), the parent company of Banco Popular de Puerto Rico, has delivered a performance that's turning heads on Wall Street. The bank's full-year 2025 results, highlighted by a significant beat on earnings and a proactive capital return strategy, have reignited the debate around its stock valuation.

The numbers tell a compelling story: stronger net interest income, rising earnings per share, and a combined capital return to shareholders of approximately $500 million through dividends and share repurchases over the year. This financial momentum has translated into a tangible market reward, with the stock posting a 90-day return of 19.54% and a one-year total shareholder return of 32.29%.

"This isn't just a quarterly blip; it's a sustained trend of execution," says Michael Torres, a financial analyst at Horizon Advisors. "Popular is demonstrating it can grow core profitability while simultaneously rewarding shareholders, a combination that builds long-term confidence."

At its recent closing price of $133.25, Popular trades below several analyst price targets and intrinsic value estimates, including a widely cited fair value of around $145.70. The central question for investors now is whether this gap represents a genuine opportunity or if the market is already pricing in the bank's future growth trajectory. Analysts point to revenue growth prospects, margin stability, and the ongoing buyback program as key drivers that could close this valuation gap.

However, the outlook is not without its caveats. The bank's performance remains closely tied to the economic health of Puerto Rico. "The results are impressive, but let's not forget the foundational risks," notes Carla Jensen, a portfolio manager known for her cautious stance. "Any economic softening in Puerto Rico or a deterioration in credit quality could unravel this earnings story faster than the buybacks can support the share price. The discount might be there for a reason."

David Chen, a retail investor who follows the regional banking sector, offers a more optimistic, if emotional, perspective: "The market is chronically underestimating this company. They're printing money, giving it back to us, and the stock is still cheap? This is a no-brainer. The shortsighted focus on 'geographic risk' misses the operational excellence on display."

For investors building a watchlist, Popular's case underscores a broader theme: identifying financial institutions that can navigate interest rate environments effectively while maintaining shareholder-friendly policies. The coming quarters will be critical to see if the bank can maintain its credit discipline and earnings power to justify a higher valuation.

This analysis is based on historical data and analyst forecasts. It is not intended as financial advice and does not constitute a recommendation to buy or sell any security. Investors should consider their own objectives and financial situation.