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Can Barclays PLC (BCS) Be a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Barclays PLC (BCS - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Barclays has a trailing twelve months PE ratio of 13.16, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.10. If we focus on the long-term PE trend, the current level is fairly below the highs for this stock, suggesting that the stock is undervalued compared to its historical levels.
Further, the stock’s PE also compares favorably with the Zacks classified Bank-Foreign industry’s trailing twelve months PE ratio, which stands at 16.04. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Barclays has a forward PE ratio (price relative to this year’s earnings) of just 11.28, so it is fair to say that a slightly more value-oriented path may be ahead for the stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Barclays has a P/S ratio of about 1.71. This is considerably lower than the S&P 500 average, which comes in at 3.01 right now. This level is somewhat below the highs for this stock.
As we can see, the stock is trading somewhat at its median value for the time period from a P/S metric. This does not provide us with a conclusive direction as to the relative valuation of the stock in comparison to its historical trend.
Broad Value Outlook
In aggregate, Barclays currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Barclays a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Barclays is just 1.66, a level that is lower than the industry average of 2.08. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, BCS is a good choice on the value front from multiple angles.
What About the Stock Overall?
Though Barclays might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘C’. This gives BCS a Zacks VGM score—or its overarching fundamental grade—of ‘D’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen one upward estimate revisions in the past sixty days compared to none downward, while the full year has seen one upward and one downward estimate revisions in the same time frame.
As a result, the current quarter consensus estimate increased to 2 cents from break-even earnings in the past two months, while the full year estimate has inched higher by 43.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Barclays is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank (Top 26% out of more than 250 industries) and a top Zacks Rank, the company deserves attention right now. In fact, over the past one year, the Zacks Banks-Foreign industry has outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
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Can Barclays PLC (BCS) Be a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Barclays PLC (BCS - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Barclays has a trailing twelve months PE ratio of 13.16, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.10. If we focus on the long-term PE trend, the current level is fairly below the highs for this stock, suggesting that the stock is undervalued compared to its historical levels.
Further, the stock’s PE also compares favorably with the Zacks classified Bank-Foreign industry’s trailing twelve months PE ratio, which stands at 16.04. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Barclays has a forward PE ratio (price relative to this year’s earnings) of just 11.28, so it is fair to say that a slightly more value-oriented path may be ahead for the stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Barclays has a P/S ratio of about 1.71. This is considerably lower than the S&P 500 average, which comes in at 3.01 right now. This level is somewhat below the highs for this stock.
As we can see, the stock is trading somewhat at its median value for the time period from a P/S metric. This does not provide us with a conclusive direction as to the relative valuation of the stock in comparison to its historical trend.
Broad Value Outlook
In aggregate, Barclays currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Barclays a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Barclays is just 1.66, a level that is lower than the industry average of 2.08. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, BCS is a good choice on the value front from multiple angles.
What About the Stock Overall?
Though Barclays might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘C’. This gives BCS a Zacks VGM score—or its overarching fundamental grade—of ‘D’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen one upward estimate revisions in the past sixty days compared to none downward, while the full year has seen one upward and one downward estimate revisions in the same time frame.
As a result, the current quarter consensus estimate increased to 2 cents from break-even earnings in the past two months, while the full year estimate has inched higher by 43.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Barclays PLC Price and Consensus
Barclays PLC Price and Consensus | Barclays PLC Quote
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
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Bottom Line
Barclays is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank (Top 26% out of more than 250 industries) and a top Zacks Rank, the company deserves attention right now. In fact, over the past one year, the Zacks Banks-Foreign industry has outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>