Why Popular (BPOP) Is a High-Conviction Value Play in 2025

The financial sector in 2025 is navigating a complex interplay of regulatory shifts, economic uncertainty, and evolving investor priorities. Yet, within this landscape, Popular, Inc. (BPOP) stands out as a compelling value opportunity. With a Zacks Rank of #2 (Buy), a VGM Score of B, and a Value Style Score of A, BPOP has demonstrated a unique ability to balance undervaluation with earnings momentum. For long-term investors seeking a high-conviction play in the banking sector, the case for BPOP is built on three pillars: robust technical fundamentals, favorable institutional dynamics, and strategic alignment with regulatory and market trends.

A Triple-Threat Fundamentals Framework

BPOP's Zacks Rank of #2 is a testament to its strong earnings estimate revisions, which have risen by $0.06 to $10.47 per share in fiscal 2025. This upward revision reflects growing confidence in the company's ability to navigate macroeconomic headwinds while maintaining profitability. Coupled with a forward P/E ratio of 10.83, one of the lowest in its peer group, BPOP's valuation appears deeply attractive. The Value Style Score of A further underscores this, as it highlights the company's ability to generate returns for investors who prioritize discounted fundamentals.

Earnings momentum has been another key driver. Over the past 60 days, one analyst revised their estimates upward, and BPOP has historically beaten expectations by +11.8% on average. This track record suggests a management team adept at executing in a volatile environment, a critical trait for a bank operating in Puerto Rico and the mainland U.S., where economic conditions vary widely.

Institutional Confidence vs. Insider Caution

Institutional ownership of BPOP has seen notable inflows in 2025. Versant Capital Management Inc. and Farther Finance Advisors LLC have both increased their stakes by over 100% in the first and second quarters, respectively, signaling confidence in the stock's undervaluation and growth potential. These moves align with broader trends in the institutional space, where value-oriented strategies are gaining traction as interest rates stabilize and credit cycles normalize.

However, insider activity tells a different story. Key executives, including VP Adorno Denissa Rodriguez and EVP Camille Burckhart, have sold significant portions of their holdings—12.18% and 20.36%, respectively. While insider selling can raise red flags, it's important to contextualize these transactions. Many of these sales occurred during periods of high stock volatility and may reflect personal financial planning rather than a lack of confidence in BPOP's long-term prospects. Furthermore, the company's recent capital actions and Q2 earnings report (scheduled for July 23, 2025) could provide clarity on whether these sales were opportunistic or indicative of broader strategic shifts.

Regulatory Tailwinds and Proxy Season Dynamics

2025 has ushered in a wave of regulatory reforms that could amplify BPOP's value proposition. At the federal level, the Federal Reserve's proposed overhaul of the Large Financial Institutions (LFI) framework aims to reduce duplicative regulatory burdens, potentially freeing up capital for lending and innovation. For BPOP, which operates in a highly regulated environment, this could translate to improved operational flexibility and margin expansion.

On the proxy advisory front, the SEC's updated insider trading policies and proxy voting guidelines from firms like ISS and BlackRock are reshaping governance expectations. BPOP's upcoming disclosures on equity grant timing and clawback policies will be critical in determining how institutional investors perceive its governance practices. Notably, the company's alignment with SEC Rule 14a-8, which mandates clearer shareholder proposal disclosures, positions it to attract ESG-conscious capital—a growing segment of the institutional investor base.

Why This Is a High-Conviction Play

For investors with a 3–5 year horizon, BPOP's combination of attractive valuation, positive earnings revisions, and institutional backing creates a compelling risk-reward profile. While the insider selling is a valid concern, it pales in comparison to the company's structural advantages:
- Strong credit quality: BPOP's loan growth guidance remains within a 3-5% range, reflecting disciplined risk management.
- Deposit base expansion: A $935 million increase in deposit balances in Q1 2025 provides a stable funding source.
- Capital efficiency: A 11.4% return on tangible common equity (RoTCE) demonstrates the company's ability to generate shareholder value.

Moreover, the SEC's push for greater transparency and proxy advisors' focus on board composition could lead to governance reforms that enhance BPOP's appeal. As the company navigates these changes, its ability to adapt will be a key differentiator.

Final Verdict: A Buy for the Patient Investor

While short-term volatility is inevitable, BPOP's fundamentals suggest it is poised to outperform in a sector where value opportunities are rare. The Zacks Rank of #2, VGM Score of B, and Value Style Score of A form a robust technical foundation, while institutional inflows and regulatory tailwinds provide additional layers of support. For investors willing to weather near-term uncertainties and capitalize on BPOP's undervaluation, the rewards could be substantial.

In a market increasingly defined by uncertainty, Popular, Inc. offers a rare blend of discounted valuation, operational resilience, and strategic adaptability. For those with the patience to see this through, BPOP is not just a value play—it's a high-conviction bet on the future of the banking sector.