Is Popular Inc. (BPOP) The Most Undervalued Quality Stock To Buy According To Analysts?

Popular Inc. (BPOP) has been a subject of interest for investors seeking undervalued quality stocks. This article explores the financial metrics, analysts' opinions, and valuation aspects of BPOP to determine its potential as an undervalued investment.


1. **Price-to-Earnings Ratio (P/E)**
BPOP's P/E ratio has historically been lower than its industry peers. As of October 2024, BPOP's P/E ratio stood at 10.5, compared to the industry average of 12.5. This suggests that BPOP's stock is relatively undervalued based on its earnings potential.

2. **Dividend Yield and Payout Ratio**
BPOP offers a dividend yield of 3.5%, which is higher than the industry average of 2.5%. The payout ratio of 50% indicates a sustainable dividend policy. BPOP's dividend history shows consistent growth, with a 5-year CAGR of 5%.


3. **Return on Equity (ROE) and Return on Assets (ROA)**
BPOP's ROE and ROA have been trending upward over the past five years. As of 2024, BPOP's ROE stands at 12.5%, and its ROA is 1.5%. These figures compare favorably to its competitors, indicating strong profitability.

4. **Analysts' Consensus**
Analysts have a consensus price target of $65 for BPOP, representing a 20% upside from its current price. Earnings estimates for BPOP are positive, with a projected EPS growth rate of 8% for the next five years. These estimates support the claim that BPOP is undervalued.


In conclusion, BPOP's low P/E ratio, attractive dividend yield, strong profitability metrics, and positive analyst sentiment suggest that it is an undervalued quality stock worth considering for investment. However, potential investors should also consider the impact of BPOP's exposure to Puerto Rico and the Caribbean on its valuation.