POPULAR, INC. (BPOP): what the price assumes

In the published model solve dated 2026-Q2, anchored at $173.90, POPULAR, INC. (BPOP) is priced for 15.1% return on equity. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/BPOP

Headline

FieldValue
TickerBPOP
CompanyPOPULAR, INC.
Sector / IndustryFinancial Services
Current price$173.90/sh
CompositionBanco Popular de Puerto Rico (BPPR) 86% / Popular U.S. 14%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfinancials
Elite ROE must persist for27.5y before normalizing (held at the 13.4% elite tier)
Perpetuity-equivalent ROE15.1%
Return on equity now13.4%
ROE gap+1.7pp
Price-to-book1.78x

Solve inputs: computed at a 10.2% cost of equity; ROE searched up to the 13.4% ROE ceiling; each 1pp moves the implied horizon ~13 years.

How unusual the bet is: within-range

ReferenceValue
vs own history+1.00σ
cohort percentile (of 163 peers)84
sustained it ~10 years at this level60%
implied end-window share0%

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.01x3expensive
Earnings0.79x2justifies
Relative0.37x3justifies
Growth1.10x1expensive

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 10.2%); the inversion above states its own rate.

Per-Model Detail (n=9)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
Bank Fair Value (P/TBV)—$182.600.95xyesTBVPS $85.05 × 2.15x (ROE (TTM) 14.3% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 2.14% allowance/loans → ×0.98)
Relative ValuationRelative$155.001.12xyesP/E 10x (static sector reference · 2026-04), scenarios: 8.3x / 10.0x / 11.7x (bear / base = reference held flat / bull), EV/EBITDA N/Ax
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$150.241.16xyesBV/sh $97.31, ROE (TTM) 14.3%, ke 9.3%
Two-Stage Excess ReturnAsset$184.670.94xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$157.791.10xyesRev $2.6B, growth 12% (input: historical growth; tapered), Terminal P/S: 3.6x / 4.3x / 5.1x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$473.200.37xyesEPS $13.52, growth 35% (input: historical EPS growth), PEG=0.36 (Undervalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset$172.051.01xyes√(22.5 × EPS $13.52 × BVPS $97.31) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$436.250.40xyesEPS $13.52 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative——no—
PEG Fair ValueRelative$507.000.34xyesEPS $13.52 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$146.161.19xyesEPS $13.52 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Share count CAGR (buyback)-4.7%

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

Bull Case

Start with what the price is asking. Popular is valued at about 1.8 times its book value, the top of its peer group, and that figure only works if the bank goes on earning something close to the 13.4% return on equity it earns today. So the whole bull case reduces to one question: is that return an accident of the last two years, or is it structural?

The composition of last year's earnings argues structural. Net interest income for 2025 was $2.5 billion, an increase of $258.9 million when compared to the year before, and the way it grew matters more than the amount. Roughly $158.2 million of the improvement came from paying less on deposits, chiefly Puerto Rico public deposits, while about $137.1 million came from lending more, mostly in commercial and construction. A bank that grows its lending book while its funding gets cheaper is not riding a rate cycle. It is exercising the pricing power that comes from being the default place islanders and island institutions keep money. The same dynamic is visible at the competition, which is a useful cross-check rather than a coincidence: FBP told its own shareholders it expects quarterly net interest margin expansion of approximately 2 to 3 bps into 2026 on similar drivers.

There is a second, quieter engine. Popular holds a large securities book, and its 2025 net interest income rose partly through Higher income from investment securities by $147.1 million driven by the re-investment of maturities of U.S. Treasury securities at higher yields by 50 basis points. That is mechanical, contractual improvement. Treasuries bought in a low-rate world keep rolling into a higher-rate world, and the earnings step up without anyone selling anything or taking additional credit risk.

The capital position gives management room to act on all of it. Stockholders' equity reached $6.2 billion at December 31, 2025, compared to $5.6 billion at December 31, 2024, with the corporation and its banking subsidiaries described as well capitalized and tangible book value per common share at $82.65. Against that base, the latest fiscal year returned about 49.7% of earnings to shareholders through dividends and buybacks, and the share count has been falling at 4.7% a year since 2022. July 2026 brought a further step: a new $1 billion repurchase authorization and a 20% dividend increase to $0.90 a quarter effective in the fourth quarter, after the prior $500 million authorization was fully used by the end of June.

The arithmetic of a shrinking share count against a rising book is the least glamorous compounding there is and among the most reliable. Each year fewer shares divide the same island franchise. That is the bull case, and it does not require Puerto Rico to boom. It requires Puerto Rico to be ordinary.

Bear Case

The variable with the most leverage over this bank is not interest rates and it is not credit. It is the pace at which federal money flows through the Puerto Rico government, and Popular says so itself. Among the factors it lists as capable of moving results is the amount of Puerto Rico public sector deposits held at the Corporation, whose future balances are uncertain and difficult to predict and may be impacted by factors such as the amount of Federal funds received by the P.R. Government and the rate of expenditure of such funds. Read that next to the earnings improvement of 2025, which came substantially from paying less for exactly those public deposits, and the shape of the exposure becomes clear. The cheapest funding in the franchise sits on a balance the company openly says it cannot predict, and that balance is the tail end of disaster recovery and pandemic-era federal appropriations working their way through an island government.

The bank's own history is the second half of the argument. The 10-K describes a severe recession that began in 2007 and persisted for over a decade and an acute fiscal crisis that led the Puerto Rico government to file for a form of federal bankruptcy protection in 2017, and notes that those conditions produced higher delinquencies, charge-offs and losses for its customers. This is not distant history dressed up as risk-factor boilerplate. It is the operating environment of most of the past two decades for Banco Popular de Puerto Rico, which supplies the large majority of group revenue.

Now connect that to the price. At about 1.8 times book, the market is underwriting a return on equity equivalent to roughly 15% held indefinitely, which in practice means today's level of return persisting for something like 27 years before it normalizes, against a cost of equity near 10.25%. Popular does earn at that level today, so the stretch is not the rate. The stretch is the duration. Among firms earning returns at this level, only about 60% held them even a decade. And the assumption is brittle in a specific way: one percentage point off the return moves the implied horizon by roughly 13 years. If the return drifts back toward the cost of equity, the multiple of book the price can support compresses toward one, and there is nothing gradual about the arithmetic of that.

Credit is where the drift would show up first, and there are early prints worth watching rather than dismissing. In the Popular U.S. segment the provision for loan losses rose to $20.5 million, an increase of $15.9 million when compared to the year 2024, driven by higher qualitative reserves and credit changes. In Puerto Rico, a single $30.1 million commercial real estate facility was charged off during the third quarter of 2025. Neither figure is large against a $6.2 billion equity base. Both sit in the commercial and construction books that generated the loan growth the bull case rests on, which is the ordinary sequence: growth first, then seasoning, then the provision.

The last piece is positioning. A bank whose revenue is concentrated in a jurisdiction that entered a form of federal bankruptcy protection nine years ago is currently awarded the highest price-to-book multiple in its peer group. Popular has earned that with results. The bear case is simply that the group is priced for its geography and Popular is priced for its return, and only one of those two facts is under management's control.

Valuation

Banks are valued on what they earn against the capital they hold, so the useful frame here is book value, not an operating multiple. Popular trades at roughly 1.8 times book. Decompose that and the price is underwriting a return on equity equivalent to about 15% held indefinitely, which in practice means today's level of return sustained for something like 27 years before it fades to normal, discounted at a cost of equity near 10.25%.

The notable thing about that requirement is how ordinary the rate is and how unusual the duration is. Popular already earns about 13.4% on its equity. That is a rate it has reached before and holds today; what the price adds is time, not level. Among firms earning at this level, only about 60% were still there a decade later, and the horizon is exquisitely sensitive to the rate: one percentage point of return moves the implied period by roughly 13 years. Almost nothing else in this valuation matters as much as that single input.

The methods built for banks agree with the price and disagree with each other about very little. The price-to-tangible-book approach, working from tangible book per share near $85 and a multiple justified by return over cost of equity, adjusted down slightly for an allowance that covers 2.14% of loans, lands just above today's quote. The two excess-return approaches straddle it, one modestly above and one modestly below. Nothing in that cluster says cheap and nothing says expensive. It says fairly priced, conditional on the return holding, which is exactly the conditional the whole exercise turns on. Where the price does stand out is against the peer group: on price-to-book, Popular sits at the very top of its cohort.

The balance-sheet read for a deposit-funded institution is regulatory capital and payout capacity rather than leverage or coverage, and on that basis Popular has room. The filing reports stockholders' equity of $6.2 billion at December 31, 2025, compared to $5.6 billion at December 31, 2024, with tangible book value per common share of $82.65 and the corporation and its banking subsidiaries well capitalized against minimum requirements that include an additional capital conservation buffer of 2.5% of CET1. In the latest fiscal year, about 49.7% of earnings went back to shareholders as dividends plus buybacks, with the share count down 4.7% a year since 2022. Popular has since raised the run rate, authorizing a new $1 billion repurchase program and a 20% dividend increase to $0.90 a quarter from the fourth quarter of 2026.

What a buyer at $171.67 owns is a franchise with genuine pricing power over its funding, a capital position that permits aggressive repurchase, and a single-jurisdiction concentration that the return has to keep outrunning for the better part of three decades.

Catalysts

The most recent quarter was the strongest evidence the bull case has. Popular reported second-quarter 2026 net income of $278.2 million and diluted earnings per share of $4.35, up about 32% from the same quarter a year earlier, helped by higher net interest income, fee growth, larger loan and deposit balances, and lower operating expenses. The expense line moving the right way while balances grow is the combination that sustains a return on equity, and it is the specific thing to check again next quarter.

Alongside the results came the capital plan. The board authorized a new $1 billion common stock repurchase program and proposed raising the quarterly dividend by 20% to $0.90 per share beginning in the fourth quarter of 2026. The prior $500 million authorization had been fully used as of June 30, 2026, with roughly $280 million of stock repurchased so far in 2026. A bank that exhausts one authorization and immediately doubles the next is telling shareholders where it thinks its own stock sits relative to value, which is a statement worth more than most guidance.

Two things sit on the horizon and neither has a scheduled date. The first is the trajectory of Puerto Rico public sector deposits, which funded much of last year's improvement in net interest income and which the company describes as difficult to forecast. The second is the credit cycle in the commercial and construction books, where the loan growth of the past two years is now seasoning. Third-quarter results, due in the autumn, will carry the first read on both.

Peer Cohorts (Per Segment, With Filing Citations)

Banco Popular de Puerto Rico (BPPR) (reported)

Popular U.S. (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Popular Inc second quarter 2026 results, July 2026

View the full interactive BPOP report on boothcheck