Investors who were brave enough to invest in Barclays (LSE:BARC) shares, or any stock, following Liberation Day, will have done well. Shares in the British bank are up 25% since the then.
So a £10,000 investment then would now be worth £12,500. That’s a very strong return in such a short period. What’s more, an investor would have locked in a much higher dividend yield than the one we see today.
But what about now? Is Barclays stock still good value?
The valuation
Barclays’ forward valuation metrics for 2025 through 2027 are positive, highlighting expected steady earnings growth and a disciplined approach to capital returns. The bank’s earnings per share (EPS) are projected to rise from 40p in 2025 to 50p in 2026 and 57p in 2027. This consistent increase in EPS reflects both operational momentum and a constructive outlook for profitability.
As such, the forward price-to-earnings (P/E) ratio’s forecast to decline from 8.2 times in 2025 to 6.7 times in 2026 and 5.83 times in 2027. This actually makes it one of the cheapest banks, according to this metric, in 2027. That’s certainly a positive accolade.
However, Barclays’s dividend yield’s little more modest than its FTSE 100 banking peers. Barclays’ dividend per share is set to grow, from 9p in 2025 to 10p in 2026 and 12.6p in 2027. In turn, the dividend yield rises from 2.7%, to 3%, to 3.3%.
The payout ratio, or distribution rate, remains conservative, falling from 22.5% in 2025 to 20.1% in 2026 before rising slightly to 22.1% in 2027. This indicates strong dividend coverage and suggests that the bank’s balancing shareholder returns with reinvestment in the business, supporting both income investors and those seeking long-term growth.
I’d suggest that with all these figures considered, it broadly trades in line with other FTSE 100 banks. I actually believe they’re all essentially fairly valued at the moment.
Fairly valued, but it could appreciate
Just because I believe Barclays is fairly valued, it doesn’t mean I don’t think it won’t appreciate in value. An extension of the current forecast into 2028 would likely support the further growth in the share price. Likewise, earnings beats and macroeconomic catalysts could push the stock higher.
Of course, there are things that could send the share price into reverse. Earnings misses and a downturn in the economy would be two of the most obvious developments. Barclays, like other banks, typically reflects the health of the economy it serves.
I certainly believe Barclays is a stock investors should consider for the long run. However, it’s certainly not as undervalued as it was two years ago. Personally, having stocked up in 2023, Barclays now represents a core part of my portfolio. For me, topping up wouldn’t make sense due to concentration risk.
