The Barclays (LSE: BARC) share price is an absolute firecracker. It’s up 53% over the last year and a remarkable 215% over two. A £10,000 investment would have grown to around £31,500 in that time, with dividends on top. When sentiment swings in favour of FTSE 100 stocks, they can really fly. Investors underestimate them at their peril.
Whenever I see numbers like that, the nerves kick in. Surely it can’t continue? Will I end up buying just as the wheel of fortune spins downwards? That said, I’ve missed plenty of gains over the years by refusing to chase red-hot momentum stocks like this one. So can Barclays keep delivering?
FTSE 100 banks all fly
There are signs others share my caution. The shares have slipped around 3% over the last month. Some may have decided Barclays was starting to look a little expensive. Just a week or two ago, the price-to-earnings (P/E) ratio was nudging 17. At the start of its strong run, the P/E was in single digits.
Following full-year 2025 results on 10 February, the P/E has fallen back. Today, it’s around 10.7, after factoring in a 21.7% jump in earnings per share to 43.8p. That’s not exactly demanding. Nor is a price-to-book ratio of 0.85.
Barclays’ pre-tax profit rose 13% to £9.1bn. That was good, but broadly in line with expectations. This largely explains why the shares have struggled to push on. Investors are greedy. They want more. Can Barclays satisfy them?
It’s doing its best, distributing £3.7bn to shareholders in 2025, up 23% year on year. It also unveiled a fresh £1bn share buyback and outlined plans to return £15bn of capital to investors over the next two years.
Most of it will come via buybacks, which the bank favours over dividends. Personally, I prefer cash hitting my account, but buybacks should underpin the share price. The yield sits at a modest 1.84%, so income seekers may look elsewhere.
Like its peers, Barclays has benefitted from higher interest rates, which allow it to widen the gap between its loan and savings rates. Group net interest income hit £12.8bn in 2025. It may narrow if interest rates continue to fall, as seems likely.
Stock market volatility risks
Barclays is now a £65bn business. A further 200% surge from here looks unlikely in the near term, even with aggressive buybacks. However, unlike Lloyds and NatWest, Barclays retains a significant US investment and corporate banking arm. That gives it growth opportunities beyond the UK, including in the US and Middle East. But it also brings volatility, regulatory risk and fierce competition from Wall Street heavyweights. A broader market downturn or spike in global volatility could easily cool the rally. Risk is always with us.
Ideally, I’d like to buy Barclays on a market dip, to skim off some of the recent froth. The danger is that by waiting, I’ll watch it shares climb even higher. They’ve developed a habit of doing that. Given the decent valuation, I still think Barclays is well worth considering buying today.
