Are Investors Undervaluing Popular (BPOP) Right Now?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Popular (BPOP). BPOP is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 9.08 right now. For comparison, its industry sports an average P/E of 10.48. Over the last 12 months, BPOP's Forward P/E has been as high as 11.26 and as low as 7.81, with a median of 9.38.

We also note that BPOP holds a PEG ratio of 0.57. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BPOP's PEG compares to its industry's average PEG of 1.37. Within the past year, BPOP's PEG has been as high as 0.92 and as low as 0.50, with a median of 0.63.

Another notable valuation metric for BPOP is its P/B ratio of 1.25. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.77. Over the past year, BPOP's P/B has been as high as 1.41 and as low as 0.98, with a median of 1.23.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BPOP has a P/S ratio of 1.67. This compares to its industry's average P/S of 1.96.

Finally, investors will want to recognize that BPOP has a P/CF ratio of 15.19. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. BPOP's current P/CF looks attractive when compared to its industry's average P/CF of 15.40. Over the past year, BPOP's P/CF has been as high as 19.61 and as low as 11.94, with a median of 16.68.

Value investors will likely look at more than just these metrics, but the above data helps show that Popular is likely undervalued currently. And when considering the strength of its earnings outlook, BPOP sticks out at as one of the market's strongest value stocks.

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This article originally published on Zacks Investment Research (zacks.com).

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