Popular Inc. earns high marks for its focus on serving the growing Hispanic population in the U.S., but at least one analyst believes shares have gotten ahead of themselves.

The San Juan company, which operates Banco Popular, has seen its stock price double in the past year, to well over the price-to-earnings multiples of its peers, said James Schutz, banking analyst at ABN Amro.

With a stock price of $36.75 at the end of last week, Popular was trading at 22.3 times 1998 earnings estimates and 3.33 times book value. Comparable-size institutions average 19.6 times earnings and 3.25 times book value.

Given the premium, Popular, with $20 billion of assets, "is unlikely to outperform the bank group over the next couple of years," said Mr. Schutz, who downgraded its shares to "hold" from "buy." The stock closed Monday at $39.9375, off 0.0625 cents.

Mr. Schutz still expects big things from Popular as it builds operations in Puerto Rico and the mainland United States.

In addition to providing routine banking services, it is targeting home equity and credit cards toward the growing Hispanic population, Mr. Schutz said. "Popular is a well-managed bank with solid fundamentals."

Its longtime focus on areas that have high Hispanic populations has given Popular a leg up on domestic banking companies that are only starting to woo Hispanic customers, added Joseph Gladue, banking analyst at Chapman & Co., a regional money manager.

But the company must also pay close attention to costs because its operations are "geographically dispersed," said Mr. Gladue, who is currently reviewing the "buy" rating he has had on shares for the past year and a half.

Broader markets were rocky, starting the day with declines on weakness from Asian stock markets and concerns that the region's economy will not improve soon. The late-morning release of positive earnings by American Express Co. helped spark a recovery, especially among large capitalization shares. (See story on page 30.)

The strong rally continued for the rest of the day, but bank shares did not participate as fully as other industries, such as telecommunications.

The Nasdaq bank index gained 0.30% and the Dow Jones industrial average added 1.02%. The Standard & Poor's bank index shed 0.68% and the S&P 500 was up 0.57%.

Shares of Valley National Bancorp gained $2.50, to $35.625, on top of a $2 jump Friday. The reason: The Wayne, N.J., company is said to being eyed by a New York suitor.

Some analysts discounted the report, which initially appeared in Business Week.

"Are they an attractive franchise? Yes," said Marni Pont O'Doherty, banking analyst at Keefe, Bruyette & Woods. "Are they imminently selling out at $45 a share? No."

A person close to the company noted that as recently as July 15, when the bank filed preliminary documents with the Securities and Exchange Commission detailing its pending acquisition of Wayne Bancorp., the company was giving no indication that it was in play. If anything has happened to alter that disclosure, the bank would likely have to say so, the source said.

But Alan D. Eskow, senior vice president and secretary at Valley National, noted that the bank's Wayne Bancorp disclosure is merely preliminary, and that it could be changed by the time the finalized information is sent to shareholders. He declined to say when a final disclosure would be made.

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