After recovering somewhat from a dramatic fall to 80p in April 2020 after lockdowns first came into effect, Barclays has moved in a sideways direction since the beginning of the year, sitting at around 148p per share.
With the British bank’s share price yet to rebound to its pre-lockdown value of 180p, investors will be paying attention to the stock as hopes are raised of an economic recovery.
Barclays forward price-to-earnings ratio
Forward price-to-earnings ratios use forecasted earnings to give investors an insight into the future value of a stock purchase. In other words, it is a prediction of the company’s future price-to-earnings.
Barclays forecasted price-to-earnings stands at 16.8. Of Barclays’ closest competitors, HSBC is the most comparable, with a forecasted price-to-earnings ratio of 17.6. Natwest and Lloyds have significantly higher figures of 59.5 and 29.0 respectively.
With a relatively low forward price-to-earnings ratio compared to their peers, investors could consider Barclays if they are looking for the lowest valued bank based on earnings.
Barclays year-to-date performance
While the forward price-to-earnings ratio provides an insight into the potential future performance of a stock, the year-to-date performance of Barclays’ share price indicates Barclays has lagged the rest of the UK banking sector.
Barclays has experienced gains of 1.19% in its share price value since the beginning of 2021.
HSBC, Lloyds and Natwest meanwhile have made more significant gains, up 3.9%, 3.84% and 3.97% respectively on the year-to-date.
With Barclays so far underperforming in 2021, there is the possibility that Barclays’ share price snaps back up in line with the rest of the banking sector. However, with updates due at the end of February we will soon find out whether the market is justified in giving Barclays a low valuation compared to its peers.