The Motley Fool

Is It Still Safe To Buy Barclays PLC?

I’m always searching for shares that can help ordinary investors like you make money from the stock market. However, many people are currently worried the market has been overheating.

So right now I’m analysing some of the most popular companies in the FTSE 100, hoping to establish if they can continue to outperform in today’s uncertain economy.

Claim your FREE copy of The Motley Fool’s Bear Market Survival Guide.

Global stock markets may be reeling from the coronavirus, but you don’t have to face this down market alone. Help yourself to a FREE copy of The Motley Fool’s Bear Market Survival Guide and discover the five steps you can take right now to try and bolster your portfolio… including how you can aim to turn today’s market uncertainty to your advantage. Click here to claim your FREE copy now!

Today I’m looking at international banking giant Barclays (LSE: BARC) (NYSE: BCS.US) to determine whether the shares are still safe to buy at 292p.

So, how’s business going?

Over the last few months, Barclays has been struggling with the Herculean task of reinventing itself, after several years of scandals and damning accusations that have haunted the bank and its reputation.

Barclays estimates that the task will cost around £1 billion but the plan is already well underway and £500 million of restructuring was completed in the first quarter of this year.

Indeed, during the first quarter, the bank improved its core tier one capital ratio by 20 basis points to 11% and reduced its exposure to Europe’s weak economy by cutting 3,800 jobs on the continent.

Additionally, the bank continues to expand in other areas. In particular, Barclays’ investment-banking division registered pre-tax profit growth of 11% in the first quarter.

Although the bank has made progress in re-structuring and improving its public image, Barclays has in the last few weeks been hit with fresh accusations of unfair practices in the derivatives market, which could set the bank back once again, if proven to be true.

Expected growth

Even after reporting a 25% fall in profits for the first half of this year, many City analysts are pleased with the bank’s overall strategy and expect Barclays’ earnings to move slightly higher this year, before taking off in 2014.

City forecasts currently predict earnings of 36p per share for this year (4% growth) and 42p for 2014.

Shareholder returns

Currently, Barclays offers a dividend yield of only 2.4% — lower than that of its peers in the banks sector, which currently offer an average dividend yield of 3.3%.

Still, City analysts expect this payout to rise 11% this year, followed by a 30% rise in 2014, in line with the company’s earnings growth.


Surprisingly, despite the bank’s positive outlook, Barclays still trades at a discount to its peers. Barclays currently trades at a historic P/E of 8, while its peers trade at an average historic P/E of around 18.

Foolish summary

Although, Barclays is currently facing more accusations of improper conduct, the bank remains well capitalised, highly profitable and undervalued compared to its peers.

So, all in all, I believe that Barclays still lookssafe to buy at 292p.

More FTSE opportunities

As well as Barclays, I am also positive on the five FTSE shares highlighted within this exclusive wealth report.

Indeed, all five opportunities offer a mix of robust prospects, illustrious histories and dependable dividends, and have just been declared by the Fool as “5 Shares You Can Retire On“!

Just click here for the report — it’s free.

In the meantime, please stay tuned for my next FTSE 100 verdict

> Rupert does not own any share mentioned in this article.

There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it!

Don’t miss our special stock presentation.

It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.

They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market.

That’s why they’re referring to it as the FTSE’s ‘double agent’.

Because they believe it’s working both with the market… And against it.

To find out why we think you should add it to your portfolio today…

Click here to read our presentation.