Popular (BPOP)

Puerto Rican financial institution Popular (NASDAQ:BPOP) met Wall Streets revenue expectations in Q4 CY2025, with sales up 9% year on year to $823.8 million. Its GAAP profit of $3.53 per share was 16.2% above analysts’ consensus estimates.

Company Overview

Founded in 1893 as the first bank in Puerto Rico to serve the working class, Popular (NASDAQ:BPOP) is a financial holding company that provides retail, mortgage, and commercial banking services primarily in Puerto Rico and the mainland United States.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Popular's competitors include other major financial institutions operating in Puerto Rico such as FirstBank Puerto Rico (NYSE: FBP), OFG Bancorp (NYSE: OFG), and in the mainland United States, regional banks like Citizens Financial Group (NYSE: CFG) and KeyCorp (NYSE: KEY).

Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income. Regrettably, Popular’s revenue grew at a mediocre 8.6% compounded annual growth rate over the last five years. This wasn’t a great result compared to the rest of the banking sector, but there are still things to like about Popular.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Popular’s recent performance shows its demand has slowed as its annualized revenue growth of 7.4% over the last two years was below its five-year trend. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Popular grew its revenue by 9% year on year, and its $823.8 million of revenue was in line with Wall Street’s estimates.

Net interest income made up 77.4% of the company’s total revenue during the last five years, meaning lending operations are Popular’s largest source of revenue.

Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.

The underlying profitability of top-line growth determines the actual bottom-line impact. Banking institutions measure this dynamic using the efficiency ratio, which is calculated by dividing non-interest expenses like personnel, facilities, technology, and marketing by total revenue.

Markets understand that a bank’s expense base depends on its revenue mix and what mostly drives share price performance is the change in this ratio, rather than its absolute value. It’s somewhat counterintuitive, but a lower efficiency ratio is better.

Over the last five years, Popular’s efficiency ratio couldn’t build momentum, hanging around 61.4%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Popular’s EPS grew at a spectacular 15.6% compounded annual growth rate over the last five years, higher than its 8.6% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its efficiency ratio didn’t improve.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Popular, its two-year annual EPS growth of 27.9% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q4, Popular reported EPS of $3.53, up from $2.51 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Popular’s full-year EPS of $12.32 to grow 10.8%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.

Popular’s TBVPS grew at a decent 5.6% annual clip over the last five years. TBVPS growth has accelerated recently, growing by 18.9% annually over the last two years from $58.45 to $82.65 per share.

Over the next 12 months, Consensus estimates call for Popular’s TBVPS to grow by 12.9% to $93.29, decent growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Popular has averaged a Tier 1 capital ratio of 16.1%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Popular has averaged an ROE of 15.7%, impressive for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows Popular has a strong competitive moat.

It was good to see Popular beat analysts’ EPS expectations this quarter. We were also happy its net interest income narrowly outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock remained flat at $123.48 immediately after reporting.

Updated: January 27, 2026 at 7:17 AM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

Although the company’s revenue growth was mediocre over the last five years, its expanding net interest margin shows its loan book is becoming more profitable. On top of that, Popular’s spectacular EPS growth over the last five years shows its profits are trickling down to shareholders.

Popular’s P/B ratio based on the next 12 months is 1.2x. Looking at the banking landscape right now, Popular trades at a pretty interesting price. If you trust the business and its direction, this is an ideal time to buy.

Wall Street analysts have a consensus one-year price target of $145.70 on the company (compared to the current share price of $123.48), implying they see 18% upside in buying Popular in the short term.