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What’s going on with the Barclays share price?

View of Canary Wharf
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The Barclays (LSE:BARC) share price has risen by 71% over the past year. This is impressive, but if I close the period to just six months, there isn’t much going on. In fact, over the past six months the share price has actually fallen by 1%. With stagnant movement in recent months, is there still value in my buying shares or should I be looking elsewhere?

Short-term lull, long-term growth

The range I’m talking about refers to the level around 185p. This was a similar price to where Barclays shares were trading just before the stock market crash last March. So although all of the losses from the crash have been made back, no additional gains can be seen. As a potential investor, I have to think about whether this accurately corresponds to the value of the business.

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To try and make an accurate call on this, I can look at recent results. The H1 2021 report showed an impressive profit before tax figure of £5bn. This was up considerably from H1 2020, with its profit of just £1.3bn. What’s more interesting to note is that in H1 2019, that profit was £3.1bn.

So when considering the bottom line, Barclays is in a more profitable position now then where it was both during the pandemic and before it. The Barclays share price traded for much of 2019 below 185p. So the growth since then is understandable. The 71% growth over the past year also reflects the bounce-back in profits since the pandemic.

Why I think the Barclays share price has been quiet

Although the moves in the Barclays share price make sense over a longer period, why has it been so tame in recent months? 

I think that many investors are waiting to see what will happen with Covid-19 and the knock-on impact on monetary policy on the part of central banks. For example, if the virus dissipates, central banks are likely to raise interest rates quicker to try and keep a lid on demand and inflation. This would be positive for a bank like Barclays. Higher interest rates would allow it to increase the net interest margin made between lending and borrowing. It should also benefit from higher transaction volumes, higher credit requests and so on.

Yet for the past few months, there hasn’t been a clear answer as to what the future holds. We go through periods of great news regarding vaccination rates and immunisation. Then we get periods where countries go back into lockdown, or rumours surface about winter lockdowns here in the UK.

That’s why I think the Barclays share price has stagnated lately. 

Waiting on the sidelines

I think it’s difficult to make a judgement call right now on whether to buy or not. The bank is clearly in a good place. Recent results show lower credit impairment charges, good liquidity ratios and strong profit. Yet for it to take the next leg higher, I think investors need more certainty about future operations. Ultimately, I can’t predict this, so I’ll sit on the sidelines for the moment and not buy the stock.

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jonathansmith1 has no position in any share mentioned. The Motley Fool UK has recommended Barclays. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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