BPOP: AI Signals Bearish Downtrend - Time to Consider Puts?

Popular is a diversified financial holding company, operating primarily in Puerto Rico and the mainland United States. Its core business involves providing retail, mortgage, and commercial banking services. In Puerto Rico, these services are offered through 'Banco Popular de Puerto Rico' ('BPPR'), along with auto and equipment leasing, broker-dealer, and insurance services. In the mainland U.S., similar services are provided through 'Popular Bank' ('PB' or 'Popular U.S.'), with branches in New York, New Jersey, and Florida, complemented by investment, insurance, and commercial direct financing leases. BPPR also conducts banking operations in the U.S. and British Virgin Islands, and New York. Popular differentiates itself through a focus on technology and business process transformation to enhance digital experiences, improve efficiency, and maintain a competitive edge.

BPOP's technical outlook is bearish. The recent price action shows a clear downtrend, with the price declining from a high of $129.32 in late September to $112.31 recently. The stock is trading below its 21-day EMA of $116.14 and its 50-day SMA of $122.09, further confirming the downward momentum. The 200-day SMA is $107.05. Momentum indicators also support this bearish view. The MACD at -3.33 is significantly below its signal line, and the RSI is at 38.83, indicating oversold conditions but also persistent selling pressure. The Stochastic Oscillator, while showing a recent uptick, remains at a low level, indicating limited buying interest. The ADX is at 33.28, suggesting a strengthening downtrend. The Bollinger Bands show the price near the lower band, indicating potential for continued downside. Overall, the indicators point to continued weakness in BPOP's price action over the next 1-3 months.

Popular, Inc.'s MD&A presents a generally positive financial picture. Net income for the quarter increased by $32.6 million to $210.4 million, driven by higher net interest income. This was supported by loan growth and higher deposits, leading to a net interest income of $631.5 million, a $63.2 million increase. The net interest margin also expanded by 27 bps to 3.49%. Non-interest income increased slightly by $2.2 million to $168.5 million. However, operating expenses also rose by $23.2 million to $492.8 million, mainly due to higher personnel costs. The corporation repurchased 1,136,390 shares of common stock for $112.0 million during the quarter. Total assets increased by $3.1 billion to $76.1 billion, and deposits increased by $2.3 billion to $67.2 billion. The provision for credit losses also increased slightly by $2.1 million to $48.9 million. While the company's 'capital ratios continue to exceed the minimum requirements', the common equity Tier 1 capital ratio decreased from 16.03% to 15.91%.

Popular, Inc.'s Q2 2025 earnings call struck a moderately bullish tone, driven by strong financial performance and increased confidence in achieving ROTCE targets. Javier Ferrer, in his first earnings call as CEO, highlighted a net income of $210 million and an EPS of $3.09, representing increases of $32 million and $0.53 per share, respectively, compared to Q1. Loan growth was substantial at $931 million, leading Jorge Garcia to 'reiterate our original 3% to 5% guidance' for the year. The company's net interest income increased by $26 million, and the net interest margin expanded by 9 basis points. Management also increased their NII growth expectations to '10% to 11% in 2025'. While operating expenses increased due to profit sharing accruals, the company is working to mitigate the impact with efficiency efforts. Lidio Soriano noted improvements in credit quality metrics, leading to a revised net charge-off guidance of 'between 45 to 65 basis points for the full year,' down from 70-90 basis points. The company also announced a new $500 million share repurchase program and a 7% increase in the quarterly dividend, signaling confidence in its capital position.

BPOP's financial performance presents a moderately positive picture. Revenue has fluctuated, starting at $1,023.8M in Q1 2024 and reaching $817.7M in Q3 2025, indicating some volatility but overall remaining relatively stable. The gross profit ratio has also varied, peaking at 0.675 in Q2 2025 before declining to 0.517 in Q3 2025. Operating cash flow is positive, with the latest quarter (Q3 2025) showing a healthy level, though specific cash flow statement data is missing for that quarter. Total debt has seen a slight increase from $1,188.2M in Q1 2024 to $1,246.8M in Q3 2025. Overall, BPOP demonstrates consistent profitability and positive operating cash flow, but the fluctuating revenue and gross profit ratio suggest potential areas of concern that warrant further investigation. The company's debt levels remain manageable, contributing to a stable financial outlook.

The company presents a moderately bullish investment profile based on its key metrics and financial ratios. Revenue has shown positive growth, indicating a healthy demand for its products or services. The gross margin has remained relatively stable, suggesting efficient cost management. The Return on Equity (ROE) indicates a solid return for shareholders. The Price-to-Earnings (P/E) ratio suggests the company is appropriately valued by the market. The debt-to-equity ratio has seen a decrease, showcasing the company's improved financial leverage. The current ratio signifies the company's strong ability to meet its short-term obligations. Overall, the company demonstrates a stable and growing business model with a healthy balance sheet, making it a moderately attractive investment for the next 6-12 months.