Popular surges after 21.5% EPS beat, $148M buyback boosts shares
Regional bank delivers 36% earnings growth, expands net interest margin to 3.61%
Popular Inc. shares climbed in Tuesday morning trading after the Puerto Rico-based regional bank delivered quarterly earnings that crushed Wall Street expectations, fueled by robust loan growth and aggressive share repurchases.
The bank reported fourth-quarter earnings per share of $3.53, comfortably ahead of the $2.91 consensus estimate, representing a 21.5% beat over analyst projections. Revenue of $823.8 million also exceeded forecasts of $804 million, as net income surged 36% year-over-year to $233.9 million.
Popular's core banking metrics strengthened significantly during the quarter. The net interest margin expanded 10 basis points to 3.61%, a key profitability measure that has been under pressure across the banking sector due to the Federal Reserve's interest rate hikes. Meanwhile, the non-performing loan ratio improved to 1.27%, indicating disciplined credit risk management amid a challenging economic environment.
The board returned substantial capital to shareholders through an accelerated $147.8 million share buyback program in the fourth quarter, leaving $281.2 million remaining under the authorization. Chief Executive Officer Ignacio Alvarez highlighted that the company exceeded its 14% return on tangible common equity target and expressed optimism about 2026 prospects on the earnings conference call.
Popular's performance stands out in the regional banking landscape. The stock delivered a 34.3% return in 2025, making it the fifth-best performing regional bank with a market capitalization exceeding $1 billion. That significantly outpaced the broader regional banking sector's 19.2% gain for the year.
For the full year 2025, Popular generated net income of $833.2 million, up sharply from $614.2 million in 2024. The return on tangible common equity exceeded 13% for the full year, demonstrating the company's ability to generate strong returns on shareholder equity even as rising interest rates pressured lending margins industry-wide.
Analysts have taken note of the momentum. UBS analyst Nicholas Holowko raised his price target to $136 from $127 while maintaining a Neutral rating, while Citi's Benjamin Gerlinger increased his target to $144 from $142, reiterating a Buy recommendation. The current consensus price target sits at $145.70, implying roughly 19% upside from Monday's closing price of $122.87.
Institutional investors have warmed to the story, with 93.6% of shares held by institutional investors. The stock trades at 11.2 times trailing earnings, a discount to the forward price-to-earnings multiple of 9.5, suggesting the market expects continued earnings growth.
Popular's focus on the U.S. mainland expansion while leveraging its Puerto Rico franchise has positioned the company to capture growth opportunities in underserved markets. The bank's market capitalization of approximately $8.6 billion places it among the mid-cap regional banks that have attracted investor interest as alternatives to larger money-center institutions.
Looking ahead, investors will be watching whether Popular can maintain its net interest margin expansion and credit quality metrics as the Federal Reserve's rate path remains uncertain. The remaining $281 million in share buyback authorization provides additional support for the stock, representing approximately 3.2% of the company's market value.
Tuesday's positive reception reflects growing confidence in Popular's ability to navigate a complex rate environment while delivering above-peer profitability. With quarterly earnings growth of 45.5% year-over-year and revenue growth of 11.6%, the bank has demonstrated resilience that analysts believe can continue into 2026.