Barclays (LSE: BARC) shares made a habit of outpacing the FTSE 100 last year, and they’ve just done it again.

Over the last 12 months, the Barclays share price has skyrocketed 111%. Only British Airways owner IAG has done better.

At some point, the momentum has to stall. But not yet. The stock has jumped another 15% in the last month. The FTSE 100 has done well in that time, rising 5.45%. Yet Barclays delivered almost triple the return.

Can this winner continue to fly?

If an investor had put £10,000 in Barclays shares a month ago, they’d now have around £11,500. That’s a pretty solid return for a bank many had written off as a serial underperformer. So what’s been driving it?

February 2024 marked a turning point when CEO CS Venkatakrishnan launched an ambitious strategic overhaul, making the high-performing UK retail division the focal point of his growth strategy.

He also snapped up Tesco’s banking arm for £600m and launched a £2bn efficiency drive. Investors woke up.

FTSE banks have also benefitted from higher interests rates. These allow them to widen net interest margins, the difference between what they charge borrowers and pay savers.

That benefit was expected to reverse last year, with the Bank of England (BoE) expected to cut base rates five or six times in 2024. Instead, we got just a couple.

This allowed the banks to unwind their interest rate hedges in a measured way. Last year probably handed Barclays the best of all possible worlds. Especially since it largely bypassed the motor finance mis-selling scandal.

Can its good fortune continue? I’m wary. The UK economy looks sticky to me. A recession can’t be ruled out. That could force the BoE to cut rates faster than currently expected, squeezing margins.

On the plus side, lower interest rates should revive the housing market, pushing up demand for mortgages.

Barclays shares still look decent value. The price-to-earnings ratio has climbed from around seven times earnings to almost 12 times. That’s a big jump. But with earnings per share forecast to grow 12.8%, it’s not excessive. The price-to-book ratio remains a modest 0.6, suggesting the valuation is still grounded in reality.

Good value, decent yield

Another downside of the rally is that Barclays’ dividend yield has fallen to 2.6%, although that’s expected to nudge up to 3% over the next year. It’s covered 4.5 times by earnings, so watch out for extra shareholder rewards.

Barclays is a FTSE rarity as it has maintained its investment banking side. With Donald Trump in the saddle, volatility looks to be baked in. That could boost activity and fees.

The 18 analysts offering one-year share price forecasts have produced a median target of just over 322p. That’s an increase of just under 6%. Combined with the expected dividend yield, this would deliver a total return of under 10% if true. After the recent surge, a period of consolidation might be on the cards. This may be one to consider at the moment but perhaps not for anyone seeking a repeat of its outperformance.

The post £10,000 invested in Barclays shares 1 month ago is now worth… appeared first on The Motley Fool UK.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Lloyds (LSE: LLOY) shares have failed to excite in recent times, with the stock down over 20% in the last five years. Racing inflation and falling investor confidence in 2022 saw it continue to suffer as shares in the FTSE 100 bank fell 14%.

Despite this, 2023 has seen Lloyds rally. Up by 12%, a strong start to the year has seen it nearly reverse all its losses from last year.

So, is now the time to be snapping up Lloyds shares? I think so. Here’s why.

Why the rally?

One of the main reasons for the recent spike in the Lloyds share price is rising interest rates. With the Bank of England (BoE) recently hiking rates to 4%, Lloyds has benefited from this.

This is because higher rates allow the business to charge customers more when they borrow, in turn boosting net interest income. For Q3, its underlying net income was up 15%, fuelled by growth in the net interest margin. And with growth projected at 23% in net interest income for its upcoming Q4 results, it’s clear to see why investors have been keen on the stock year to date.

Looking ahead, while many think that interest rates are near their peak, it’s predicted that they could jump a further 25-50 basis points in 2023. With this in mind, the business looks set to continue to benefit in the months ahead.

Not all good news

While Lloyds stock has jumped this year due to the BoE’s attempts to curb inflation, rate hikes are a double-edged sword. Higher interest payments may see customers default on loan payments. Clearly, this is bad news for the bank.

Lloyds is also more susceptible to a weakening UK economy giving its greater domestic focus compared to its competitors. With the UK economy already in trouble, and with 2023 set to be choppy, Lloyds could suffer as a result.

Remaining positive

Despite this, I like the stock due to its dividend yield. Figures released yesterday revealed that inflation had eased for the third month in a row to 10.1%. With a 4% yield, while it’s not inflation-beating, the passive income generated from Lloyds stock offers me a partial hedge. With rates not set to come down to a more respectable level for the foreseeable future, buying Lloyds makes sense.

The stock also has a low valuation. With a price-to-earnings (P/E) ratio of around 8.7, this sits comfortably below the FTSE 100 average of around 14. It also has a forward P/E of just 7.

Should I buy?

I’ve been tracking Lloyds shares for a while. And I recently decided to bite the bullet and add the stock to my portfolio. Its low valuation and high dividend yield make it an attractive proposition. And despite the threat of a weak UK economy, hopefully, the gains seen from high interest rates will allow Lloyds to offset this.

When I last bought Lloyds stock, I thought I had enough exposure. However, with its upward trajectory and at its current price of around 53p, I still think it’s attractive. With this in mind, I’ll be looking to top up my holding in the weeks ahead.

The post Lloyds shares are up over 10% in 2023! Is it time to buy? appeared first on The Motley Fool UK.

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• Here’s how much an investor needs in Lloyds shares to earn a £125 monthly income
• Selling for £1, are Lloyds shares still a bargain?
• Here’s what fresh legal news could mean for Lloyds shares

Charlie Keough has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The next few weeks are set to see businesses update investors with their latest results. And with the way 2022 has played out, it’s no surprise some firms have been posting sub-par results. With this in mind, I’m keeping an eye on Lloyds (LSE: LLOY) shares.

It’s been a tough year for the business. The grim economic outlook has seen its share price fall by 14% in 2022. Across the last 12 months, it’s down a slightly more respectable 12%.

However, with the stock currently trading for around 43p, I think now would be a good time to add it to my portfolio. Here’s why.

Lloyds profits slide

It hasn’t been the smoothest ride for long-term Lloyds shareholders. And yesterday this continued as the bank announced that its pre-tax profits for Q3 fell by over 25% to £1.5bn.

The fall was largely pinned to provisions for bad debts and loan losses. And with these jumping to £668m, this indicates that Lloyds is protecting itself against customers who may default on payments in the future.

The release saw the Lloyds share price slip in the early hours of the morning. That said, it recovered to finish yesterday slightly up.

Silver lining

The large drop in profits clearly isn’t what Lloyds shareholders wanted to hear. But it’s not all bad news. One major positive was the 13% rise in net income due to rising interest rates. With rates in the UK currently sat at 2.25%, this has allowed the firm to charge customers more when they borrow from the bank. With this, Lloyds was also able to increase its net interest margins.

As inflation continues to soar and show no signs of slowing down as we head into 2023, there have also been predictions that rates could be hiked to as high as 4% in the months and years ahead. Going forward, this will continue to provide a boost for Lloyds.

What I also like about Lloyds is the passive income stream I can create by buying the stock. With a FTSE 100 average-beating 5% dividend yield, the stock seems like a smart play in current times. Its low price-to-earnings ratio of seven is also an attractive factor.

Housing market slowdown

Lloyds also gave a bleak prediction for the future state of the UK housing market. And as of one the largest mortgage lenders, this may spell trouble for the business. It predicted that UK house prices will fall by 8% next year, followed by a long period of stagnation.

However, this could be offset by its new rental venture, Citra Living, and it has predicted that demand is set to increase across the next five years.

Why I’d buy

There’s no doubt in my mind that Lloyds shares will be a slow burner. However, as a Fool, a long-term approach to investing doesn’t faze me. The short term may be volatile for the business as the UK braces itself for a tough year ahead. However, with the bank set to benefit from rising interest rates, along with its substantial dividend yield, I think the stock is a smart buy. While I don’t have any spare cash right now, if I did, I’d happily buy Lloyds shares at their current price.

The post Are Lloyds shares still a buy despite falling profits? appeared first on The Motley Fool UK.

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• Here’s how much an investor needs in Lloyds shares to earn a £125 monthly income
• Selling for £1, are Lloyds shares still a bargain?
• Here’s what fresh legal news could mean for Lloyds shares

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Lloyds (LSE: LLOY) shares are on a surge. Despite being down 9% year to date, this week the stock is up around 6%. The last 12 months have seen it rise by 7%.

In times gone by, a share in the FTSE 100 bank would set you back as much as 65p. Today a share costs just over 45p.

For this price, I’d rush to add Lloyds shares to my portfolio. Here’s why.

Lloyds share price history

Before we start, let’s take a look at why the Lloyds share price has fallen in the last few years.

The stock entered 2020 trading at 63p. However, with the pandemic causing markets to fall across the globe, the year saw Lloyds stock drop 42%, and at times to as low as 25p.

Since then, it has made small recoveries but has failed to sit above the 50p mark for a noticeable period.

With racing inflation, this year has told a similar tale. Consumers are tightening their belts and markets are losing value as rates continue to rise. Recently, it was predicted that inflation could spike to as high as 22%.

Why I’d buy

So, with such a bleak outlook, why would I buy Lloyds shares?

Well, the first reason is rising interest rates. To counteract rising inflation, the Bank of England has been hiking rates. Its most recent hike was to 1.75%. However, there have been predictions this could go as high as 3%-4%.

For Lloyds, this is good news. And this is because the firm can charge customers more when they borrow from it. Its net income rose 12% in the first half of the year, with interest rates likely playing a part in this. It also saw its net interest margin increase as the firm raised its outlook for the year.

With this said, it’s not just the potential of higher interest rates that attracts me. The stock currently trades on a price-to-earnings ratio of 7.5. This is below the ‘benchmark’ of 10. And to me this signifies that Lloyds is undervalued.

A smart play with rising inflation would also be to create a stream of passive income. And with a dividend yield of 4.7%, Lloyds offers this.

Lloyds concerns

Even with this, there are a couple of factors that are of concern.

While rising interest rates are positive, they could also see customers default on their payments. For Lloyds, this would clearly be bad news.

On top of this, as one of the UK’s largest mortgage lenders, Lloyds could also be affected by the UK housing market showing signs of a slowdown. In its latest results, homebuilder Barratt Developments said that the number of homes being reserved was now below pre-pandemic levels. As a result, it expects house price growth to slow.

However, I’d still buy Lloyds shares today. The inevitable rise in interest rates will benefit the bank. And with its low valuation and dividends, the stock would be a strong addition to my portfolio. While a housing market slowdown may pose a threat, I think the moves Lloyds is making in the rental market will help offset this. For 45p, I’d rush to buy.

The post I’d rush to buy Lloyds shares while they’re still under 50p! appeared first on The Motley Fool UK.

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• Here’s how Lloyds shares could climb another 50%… or crash 50%!
• Lloyds shares just dipped below the £1 mark!
• Here’s how much an investor needs in Lloyds shares to earn a £125 monthly income
• Selling for £1, are Lloyds shares still a bargain?
• Here’s what fresh legal news could mean for Lloyds shares

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

With inflation already above 10% in the UK. And with predictions that this figure could more than double in the months ahead, creating a passive income stream that puts my money to work doesn’t seem like too bad an idea.

Passive income exists in multiple forms. And despite what some people think, I don’t need a huge amount of capital upfront to create some sizeable returns. Here’s the plan I’m using to build a steady stream to last me for the long term.

Start early

The most important factor for me is the idea of starting early. As a Fool, I believe long-term investing is the most efficient way to put my money to work. And as a 20-something, I have time on my side. The earlier I start, the better chance I’ll have to build a sizeable pot of cash. After all, that’s the aim.

Top up my funds

Despite time being on my side, unfortunately, an abundance of money isn’t. But like I said, I don’t need bundles of cash to put my plan into action today.

What I need to do is decide how much I am willing to give up a month. And with this cash, I want to invest it continuously. By doing this, I’ll benefit from ‘pound cost averaging’, which essentially balances out the price that I buy in at.

Reinvest my dividends

Another step I’d take to maximise my returns is by reinvesting the dividend payouts I receive. From this, I can benefit from compounding. For example, if I own a stock that pays me a 6% dividend, and generates 7% growth per year, that gives me a 13% annual return. Over the course of a few years, this may not seem great. However, an initial £500 investment compounded over 30 years (the length of time I aim to invest for) would return £24,000.

What’s more, should I incorporate the monthly payments (say £30) I’d have been adding, after 30 years this amount would be around £155,000!

Pick high-quality companies

The final factor I’d consider is the quality of the company I chose to invest in.

I want to avoid assets like growth stocks as they often don’t pay dividends to shareholders. Instead, I want to pick dividend stalwarts that have a strong track record of paying out to investors in times gone by. These businesses would hopefully allow me to see growth. And, more importantly, they would keep my passive income stream running.

Some examples of these types of companies include Lloyds and BT.

There’s always a risk

Despite the above, I must always be wary that no dividend is guaranteed. These payments can be cut off by a business at any time if they choose to. I must also be conscious of the fact I may see lower returns than I expected. Both of these could put my plan in jeopardy.

Luckily, investing in multiple companies will help mitigate the risk of this happening. And by following these steps, I’m confident I could build a lifelong passive income stream.

The post Here’s my plan for building lifelong passive income! appeared first on The Motley Fool UK.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

2022 has been characterised by red hot inflation, rising interest rates, and falling markets. The world’s largest index, the S&P 500, has fallen 14% year to date. But before it rebounded in July, the shares reached a low of $3,636, marking a 23% year-to-date loss. Over the course of a year, the index has fallen 8%. Across the pond the situation isn’t nearly as bad, with the FTSE 100 down 0.01% for the year. But this still highlights its stagnant returns.

However, since July, things seemed to have been picking up. So, is now the right time to be investing in the stock market? Or should I be searching for safer ways to grow my capital? Let’s take a look.

The year so far

As mentioned, the reason markets have been suffering is tied to the macro economy. Inflation has been reaching record figures in the last few months, caused by a combination of supply bottlenecks, Covid-19 government intervention, and the Russia-Ukraine crisis. In July in the US, inflation reached 8.7%, and in the UK, it reached 10.1%.

The way that central banks are controlling this sky-high inflation is by raising interest rates. Both the UK and US have hiked their rates. When rates rise, people are more likely to keep hold of their money, as they can earn a higher risk-free rate. This deters them from buying speculative assets like stocks, and stock market valuations usually take a hit.

One of the main reasons that markets have rebounded since July, is the news that US month-on-month inflation fell between June and July. This signified that inflation was coming under control and seems to have restored investor confidence in markets and the wider economy.

However, things are far from plain sailing. Energy prices are still soaring, which is keeping inflation high, and putting pressure on businesses around the world. What’s more, Citi recently announced a forecast of 18% inflation in the UK by January. It also highlighted it expected an interest rate of between six and seven percent to be enforced to control this. If these figures are correct, the UK economy could plunge into recession.

Is now the time to invest?

The good news about the stock market is that there are shares that perform well during recessions and times of economic turmoil. ‘Defensive’ industries like supermarkets, telecoms, and high-dividend stocks are usually a good play, but still carry heightened risk.

As for myself, I’m on the lookout for bargain companies with established reputations. Stocks that are beaten down by negative market sentiment, but still have solid underlying fundamentals. Anything other than such stocks I’m going to steer well clear of. Although the markets have seen a slight rebound, there’s no telling how inflation and interest rates will develop over the remainder of this year. However, I still think that investing in stock is my best bet at building long-term wealth, and as such I will still be investing during this turbulent period.

The post Have we seen the worst of the 2022 stock market crash? appeared first on The Motley Fool UK.

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• 5 years ago £10,000 bought Rolls-Royce shares. How many would it buy today?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Dylan Hood has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Lloyds (LSE: LLOY) shares have struggled so far in 2022, falling into the same bearish spiral experienced by most of the stock market. Year to date the shares are down 8%. This has largely been due to the economic backdrop. Rising interest rates and inflation have created a tough macroeconomic environment for stocks. That being said, Lloyds is actually up 4% over the last 12 months. So, is now the time to add this FTSE 100 stock to my portfolio? Let’s take a closer look.

The double-edged sword

It’s no secret that inflation has been wreaking havoc with markets in 2022. The pandemic is partly to blame for this as huge government stimulus coupled with supply shortages sent prices skyrocketing. Then rising energy prices from the Russia-Ukraine conflict sent inflation soaring across the globe again. In fact, in the UK and US, prices rose by 10.1% and 8.7% in June 2022.

The way that central banks are fighting this is by raising interest rates. When rates rise, people spend less, and economic growth slows. This is usually bad news for the stock market as it means people are less likely to invest in markets. Evidently, this is bad news for Lloyds shares. In addition to this, it means that people are less likely to take out loans, as they’re being charged more in interest on those loans.

However, the flip side of this argument is that when loans are taken out, Lloyds can charge more on them, hence increasing its own top line. Lloyds is already the UK’s largest mortgage lender and hence is in a good position to reap the benefits of hiked rates.

A good value stock?

A big part of why I like the look of Lloyds shares is due to their meaty 4.7% dividend. With inflation on the rise, stagnant money is losing value. The Lloyds dividend can help me mitigate this risk. In addition to this, with a 7.5 price-to-earnings ratio, the shares look cheap to me at 45p. Competitors HSBC and NatWest trade with P/E ratios of 9.6 and 10.5, which shows me that Lloyds shares are slightly undervalued compared to its market.

The stock may be good value, but this doesn’t mean that it’s recession-proof. With rates still on the rise, there’s serious talk of the UK entering a recession by the end of 2022. Lloyds has struggled during crisis times, and its share price has never fully recovered from 2008. This factor could hold the stock back throughout the rest of the year and beyond.

The verdict

So at 45p, are Lloyds shares a buy? I reckon so. The stock looks cheap to me, and the healthy dividend is always a bonus. Rising rates do pose a threat, but the financial sector is in a favourable position to manage this risk. Therefore, I’m looking at adding a Lloyds position to my portfolio in the near future.

The post Lloyds shares are down 8%: should I buy now? appeared first on The Motley Fool UK.

More reading

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• Lloyds shares just dipped below the £1 mark!
• Here’s how much an investor needs in Lloyds shares to earn a £125 monthly income
• Selling for £1, are Lloyds shares still a bargain?
• Here’s what fresh legal news could mean for Lloyds shares

Dylan Hood has no position in any of the shares mentioned. The Motley Fool UK has recommended HSBC Holdings and Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The Lloyds share price (LSE: LLOY) hasn’t been that strong for a while. And now it’s down over 15% this year already.

That doesn’t compare favourably to the FTSE 100 fall of just over 2% in the same period.

In fact, while the FTSE 100 has pretty much recovered from it’s pandemic-driven lows, Lloyds shares remain stubbornly below their pre-Covid range of 50p-60p.

And let’s not even get started on looking back to before the financial crash of 2008, when the shares were well above £2.

But does that mean there’s an opportunity for me to pick up Lloyds shares now on the cheap?

As one of most traded shares in the FTSE 100, maybe I should finally be getting in on the act too.

Positive news ahead?

The history of a stock is a useful guide, but the future is what matters. So, when considering which shares to buy for the long term, I look ahead rather than back.

And the future holds some good news from Lloyds’ perspective, with further interest rate rises on the cards from the Bank of England. The next rate decision, due on 4 August, has analysts and markets evenly split between forecasting a 0.25% or 0.5% rise.

Rising rates could continue for a while as the UK and other countries alike try to tame inflation. Higher rates mean higher margins on Lloyds’ main mortgage lending business. That should boost profits and the share price.

But there’s a way to go before we return to the more ‘normal’ 5% interest rate range we saw before the financial crash. So realistically, I think Lloyds shares have far more potential as an income share, rather than a growth share for now.

Can Lloyds be a stable earner?

Long-term shareholders have had a tough time of it. After the dividend was halted in 2008, it wasn’t restarted until 2014.

Since then, it’s not exactly been a dividend aristocrat, but it has at least been paying a dividend. And at current prices, the yield is around 4.5%.

That won’t beat inflation, but it’s comfortably above the 3.8% FTSE 100 average.

So, I could buy now while it’s relatively cheap and hold, just for the income. But I do see some major hurdles ahead for Lloyds.

Long-term challenges

There’s no doubt that banking is changing. As more and more people go for the ease and convenience of online banking, Lloyds needs to evolve.

So far, the wider digital transformation in the sector has focused on simpler accounts. But it’s not difficult to see the big online competitors expanding into cross-selling other more complex products, including mortgages.

That’s why I think Lloyds faces a real threat to the competitiveness of its main mortgage business. Especially with rising interest rates making that business more attractive to rivals.

I think it will come down to how well and how fast CEO Charlie Nunn can implement the new group strategy. It’s something to watch out for.

Am I tempted by the low Lloyds share price?

I can see why, when priced in the low-40s, Lloyds shares can look an attractive income prospect. But I’m not yet convinced about its long-term growth prospects.

I’ll hold fire on buying for now and watch that dividend reliability.

The post Is the Lloyds share price low enough to buy now? appeared first on The Motley Fool UK.

More reading

• Here’s how Lloyds shares could climb another 50%… or crash 50%!
• Lloyds shares just dipped below the £1 mark!
• Here’s how much an investor needs in Lloyds shares to earn a £125 monthly income
• Selling for £1, are Lloyds shares still a bargain?
• Here’s what fresh legal news could mean for Lloyds shares

Michelle Freeman has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Earnings results are a great way for investors to judge a company. They’re used to determine whether companies are on track with their initial guidance. These results can often radically move share prices in either direction, depending on the numbers reported. So, here’s an earnings preview for three FTSE firms reporting results this week.

The usual approach is to compare firms’ new numbers to those from prior years. But certain revenue figures may have been impacted by the pandemic, so it’s important to get context from pre-pandemic levels too. It can also be useful to consider whether a company can perform better than its previous year’s numbers, or if it can beat analysts’ annual forecasts. Analysts in the UK don’t always publish earnings previews for quarterly or half-year periods, but given their popularity, the shares covered below are exceptions. All of them have financial years that end in December.

Rio Tinto (H1 Earnings)

Rio Tinto (LSE: RIO) is an Anglo-Australian multinational company. It’s the world’s second-largest metals and mining corporation. The FTSE 100 firm’s main export is iron ore. Rio is set to reveal its H1 numbers for its six months performance ending June on 27 July.

Its earnings preview seems to indicate a slowdown in both its top and bottom lines. This is most likely due to the perpetual lockdowns in China that have been limiting construction activity. China is the group’s biggest customer, hence the gloomy forecasts. That being said, a sudden change in health policy in China could see Rio edge closer to its FY21 figures and could spell a healthy jump in its stock.

Barclays (Q2 Trading Update)

Barclays (LSE: BARC) is one of the UK’s biggest banks. It operates in many countries across the globe, and also operates an investment banking division. The bank is expected to disclose its Q2 figures for its three-month performance ending June on 28 July.

Analysts covering Barclays are expecting the bank to improve on its total income marginally this half, on a year-on-year basis. However, its most recent earnings per share estimate has been downgraded from 7.6p in the last week. The increase to its top line is most likely due to the effects of higher interest rates. Nonetheless, a decrease in investment banking activity from the current bear market is going to cause its bottom line to suffer. But if the dual-listed stock surprises investors with better than expected figures, a rally could be a possibility.

NatWest (H1 Earnings)

NatWest (LSE: NWG) is another UK bank reporting results this week. The group operates a wide variety of banking brands, offering personal and business banking, private banking, insurance, and corporate finance. It’s scheduled to unveil its H1 earnings for its six months performance ending June on 29 July.

Just as is the case with its sector peer, analysts are expecting the same trend. Alongside that, investors in its shares and the wider stock market will be paying attention to its remediation figure and number of late-stage loans to determine whether the UK is heading for a recession. The former is essentially the amount of money allocated as a buffer to cover potential defaults from customers.

The post Earnings preview: Rio Tinto, Barclays, NatWest appeared first on The Motley Fool UK.

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John Choong has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Earnings results are a great way for investors to judge a company. They’re used to determine whether companies are on track with their initial guidance. These results can often radically move share prices in either direction, depending on the numbers reported. So, here’s an earnings preview for three FTSE firms reporting results this week.

It’s always best to compare firms’ new quarterly/half-year numbers to those from prior years. But certain revenue figures may have been impacted by the pandemic, so it’s important to get context from pre-pandemic levels too. It can also be useful to consider whether a company can perform better than its previous year’s numbers, or if it can beat analysts’ annual forecasts. Analysts in the UK don’t always publish earnings previews for quarterly or half-year periods, but given their popularity, the shares covered below are exceptions.

Lloyds (H1 Earnings)

Lloyds (LSE: LLOY) is one of Britain’s biggest financial institutions. Its brands include Lloyds itself, Halifax, and Bank of Scotland. It earns the bulk of its revenue from mortgage loans. The FTSE 100 bank is expected to post its half-year earnings for its six months performance ending June on 27 July. The company’s financial year ends in December.

The overall consensus is that Lloyds is expected to continue growing its top line from rising interest rates. That being said, its diluted EPS is expected to decrease for the half year and full year. This is most probably due to the increasing number of defaults and bad loan provisions. Investors will also be keeping an eye out for the remediation figure, number of late-stage loans, and free cash flow to determine whether the UK is entering a recession.

Shell (Q2 Trading Update)

Shell (LSE: SHEL) is a British multinational oil and gas company. It is one of the biggest oil and gas firms. And by revenue and profits, it’s one of the largest companies in the world. The giant is set to reveal its Q2 numbers for its three months performance ending June on 28 July. The company’s financial year ends in December.

The earnings preview seems to indicate a top and bottom line improvement to Shell’s business, as last year’s figures were still impacted by worldwide lockdowns. As global travel resumes, investors will be keeping an eye out for future guidance to determine whether analysts estimates can be met for the full year. If so, the Shell share price is expected to stay green for the foreseeable future.

Unilever (H1 Earnings)

Unilever (LSE: ULVR) is a consumer goods conglomerate producing food, condiments, ice cream, cleaning agents, beauty products, and personal care. Its brands include Lynx, Ben & Jerry’s, Dove, and many more. Unilever will be releasing its half-year earnings for its six months performance ending June on 26 July. The company’s financial year ends in December.

While revenue is expected to increase on a half-year and full-year basis, underlying EPS is expected to fall. This is most probably due to high inflation rates that are beginning to take a toll on a global scale, with higher costs impacting the producer’s operation expenditure. Nonetheless, a beat on both revenue and EPS estimates this week could see the Unilever share price push into the green for the year.

The post Earnings preview: Lloyds, Shell, Unilever appeared first on The Motley Fool UK.

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John Choong has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.