The Benefits Of Investing In Barclays PLC

Today I am outlining why Barclays (LSE: BARC) (NYSE: BCS.US) could be considered an attractive addition to any stocks portfolio.

Critical divisions picking up the pace

An environment of souring investor sentiment has whacked performance at Barclays in recent times, and the bank advised in last month’s Barclaysinterims that adjusted pre-tax profit slumped 7% during January-June to £3.35bn, prompted by a 12% slide in adjusted income to £13.33bn.

In particular, the company was hit by an 18% income slip at its Investment Bank division, which dropped to £4.26bn. And while revenues are expected to keep heading south as Barclays withdraws from riskier trading activities, investors should take confidence that strong progress elsewhere should underpin robust growth in coming years.

Indeed, the solid British economic recovery helped push income at Personal and Corporate Banking 1% higher during January-June, to £4.36bn, primarily on the back of strong mortgage loan and savings products demand. And rising consumer activity at home pushed Barclaycard income 5% higher to £2.12bn.

Cost-cutting keeps on rolling

Mitigating the current challenges to the top-line, the success of Barclays’ Transform restructuring package continues to provide a ray of sunshine for the bank.

Indeed, the measures helped dragged adjusted operating costs 9% lower during the first half of the year, to £8.88bn, with Barclays noting solid progress across the entire group. In addition, the bank was boosted by expenses attributed to implementing the plan slipping by almost a quarter to £494m during the period.

Barclays has introduced a number of initiatives to slash costs and adapt to changing consumer trends, from improving its online banking services through to closing down traditional branches and establishing ‘satellite’ outlets in supermarkets. And the programme still has plenty left in the tank to bolster earnings looking ahead, with further rounds of headcount reductions in the offing.

Earnings poised to explode

Given this encouraging backdrop, Barclays arguably boasts the tastiest growth projections across the entire British banking sector. Indeed, City brokers expect the company to punch earnings expansion to the tune of 25% in the current year — to 20.9p per share — and an additional 28% rise is chalked in for 2015, to 26.8p.

These forecasts leave the bank dealing on a P/E multiple just above the value watermark of 10, at 10.6, although next year’s further stampede drives the figure comfortably within bargain territory at just 8.3.

And Barclays’ terrific price is underlined by a price to earnings to growth (PEG) rating which stands at 0.4 for 2014 and 0.3 for next year — any reading below 1 represents tremendous bang for one’s buck.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.