Barclays (LSE:BARC) shares are up 70% since the market closed for Christmas a year ago. That means £10,000 invested then would be worth £17,000 now. What’s more, the shares would have paid roughly £300 in dividends during the period.
These results are incredibly strong and, it’s important to note, not common. Most novice investors will be looking to see their portfolio grow by around 8%-10% annually over the long run. So having a stock surging by 70% in a single year is something of an anomaly in the UK.
Thankfully for me, Barclays has been part of my portfolio for a long while, and I bought a substantial amount of its during the Silicon Valley Bank fiasco of 2023 — the stock dipped as low as 130p back then.
Plenty of re-ratings, complemented by buybacks
Barclays has performed well in 2025. It’s on track to record its best ever year in terms of pre-tax income, exceeding the £8.4bn made in 2021. That comes in spite of its impairment charges relating to the motor finance scandal and a £110m writedown (loss) due to the collapse of Tricolor.
But that’s not the only reason the share price has excelled. Another is buybacks. This is when the company buys shares of its own stock, essentially cancelling them. In 2025, the group bought back £2bn worth of shares, boosting earnings per share and increasing each remaining shareholder’s claim on future profits.
The impact of this can’t be overstated. Given the market cap at the beginning of the year, Barclays may have bought back something in the region of 3%-5% of the shares in circulation.
And then there’s the re-rating. A re-rating is when the market starts valuing a company more highly than before, pushing the share price up even if profits haven’t changed yet.
In this case we can see that Barclays was trading around five times forward earnings in early 2023. Now it’s trading at 10.5 times forward earnings. In other words, investors are simply willing to pay more for the stock.
And why would they be willing to pay more? Well, the bank looks more stable than it did two years ago. The earnings forecast for the medium term is also significantly improved. In short, it’s higher on quality and growth than it was back then.
What about 2026?
It’s really hard to look at Barclays today and think it’s cheap. Especially when you’ve been following it for several years. As noted, it’s trading at 10.5 times forward earnings, and that falls to 8.5 times in 2026 based on projected earnings. It’s not expensive, it’s just a long way above where it has been in recent years.
I can also see why investors who often look beyond the valuation data will be excited. Barclays is looking increasingly aggressive with a takeover of Best Egg — a personal loan platform in the US — and the granting of its Saudi investment licence.
The stock is worth considering. However, for me, valuation is the sticking point. The margin of safety just isn’t there, even though I’m positive about the company’s operational prospects.
