All the way back in 2007, Barclays (LSE: BARC) hit an all-time high of 781p. Since then the bank’s shares have tumbled and now trade at just 177p, which is a fall of 77% in less than nine years. While they may not trade at 781p for a little while yet, a gain of 341% could be achievable over the coming years, even if the market currently feels that Barclays’ future is rather downbeat.

Clearly, Barclays is undergoing a major transition at the present time. Its CEO has only been in the job for around two months and as such, the bank’s long-term strategy is still being formulated. However, it seems likely that Barclays will focus to a greater degree on investment banking in future years, since it has historically been a more profitable space than retail banking.

Growth now

That said, Barclays is expected to post strong numbers on the earnings front right now, with bottom-line growth due to come in at 24% for 2015. This has the potential to improve market sentiment in the coming months. With the bank due to record a rise in earnings of 21% in the current year, investor perception of Barclays could begin to change as it begins to put together a run of index and sector-beating financial performances.

If investor sentiment in Barclays were to improve, it has scope to do so on a major scale. In other words, Barclays trades on a rock bottom valuation and has the potential to benefit from a huge upward rerating. For example, using 2015’s expected earnings it has a price-to-earnings (P/E) ratio of just 8.2. Using 2016’s forecast earnings, this falls to just 6.8. For a company growing its bottom line at such a rapid rate, a P/E ratio of three times that figure could easily be justified and would still give a price-to-earnings growth (PEG) ratio of less than one.

For instance, if Barclays were to trade on a forward P/E ratio of 20.5, it would have a PEG ratio below one. Encouragingly, its shares would be priced at 531p in that scenario.

And the future?

Of course, that’s still some way off its all-time high, but with Barclays performing so well as a business and having a potentially refreshed strategy, it could continue to grow its earnings at a rapid rate. As such, there’s scope for further share price increases in the long run. That’s especially the case with the global economy continuing to improve and Barclays being well-placed to benefit from a recovering US and eurozone in particular.

Although a share price gain of 341% sounds rather excessive, Barclays has the potential to rapidly deliver stunning capital gains. After a hugely disappointing period that has left many investors feeling negative about the bank, the present ebb in its valuation could be the perfect opportunity to buy, ahead of a period of welcome outperformance for a bank that seems to have been a perennial under-achiever in recent years.

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Peter Stephens owns shares of Barclays. The Motley Fool UK has recommended Barclays. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.