This has not been a sparkling year for the Barclays (LSE: BARC) share price, delivering another year of negative returns for long-suffering shareholders.
The Blue Eagle bank has hit some bumps along the way, including a sharp slowdown in deals at its US investment bank. Meanwhile, UK lending growth has slowed and bad debts are rising. In short, this is not an ideal time to be a big British bank.
The Barclays share price takes a beating
At its 52-week high, the bank’s shares peaked at 198.86p on 8 March. However, this top didn’t last, with the shares crashing within days due to an American banking crisis. By 20 March, they had collapsed to 128.12p — all within 12 days. Crikey.
This FTSE 100 stock then bounced back hard, closing at 161.46p on 15 September. Alas, the shares have fallen back again. On 30 October, they revisited their 2023 low of 128.12p. That’s a long way from the 215.5p they closed at on 14 January 2022 — a five-year high.
As I write on Thursday afternoon, 30 November, this stock hovers around 141.66p. This values this Footsie firm at £21.3bn — a modest price tag for one of Britain’s biggest lenders.
Here’s how the shares have performed over five periods:
| One month | +7.6% |
| Six months | -6.4% |
| 2023 to date | -10.7% |
| One year | -12.1% |
| Five years | -13.0% |
Despite having risen 10.6% from their October low, Barclays shares have delivered double-digit capital losses in 2023 and over one year and five years. However, these returns exclude cash dividends, which are a big deal for Barclays shareholders.
In the bargain bin
For the record, my wife and I own shares in Barclays, bought for our family portfolio at 154.45p each in July 2022. With the share price now 141.66p, we are nursing a paper loss of 8.3%. But there’s no way I’d sell at current prices, because I see this stock as deeply undervalued.
Right now, Barclays shares trade on a lowly rating of 4.2 times earnings, producing a whopping earnings yield of 23.8%. That’s close to 2.6 times the FTSE 100’s earnings yield of 9.2%.
The bank’s powerful profits and cash flow allow it to pay generous dividends. The cash yield of 5.5% a year is covered a strong 4.4 times by earnings. This cash stream looks safe as houses to me — with room for uplifts in 2024 and beyond.
Furthermore, Barclays is using its spare capital to buy back its shares by the boatload. For example, on 28 July, the bank announced a new buyback programme to retire £750m of shares. Shrinking its share base like this makes each individual share more valuable (all else being equal, that is).
I like the stock
Of course, 2024 could turn out to be a yucky year for British banks. Consumers are struggling with rising interest rates, rising prices, and crippling energy bills. In addition, bad debts and loan losses are rising, hitting Barclaycard and other lending divisions.
Despite this, if I had cash to splash and didn’t already own this stock, I’d be filling my boots at the current Barclays share price!
