Wednesday, April 28, 2010

Barclays Bank PLC 2

I would like to continue to talk today about the only foreign stock that I own and it is Barclays Bank (NYSE-BCS). As I said yesterday, it is hard to evaluate how well foreign companies are doing. You have to worry about foreign currency and different accounting methods. In the case of ADRs, as I have with Barclays bank, I not only have to worry about US currency, but also the UK pound.

The first think I want to find out is, was there any Insider Buying or Insider Selling for this bank recently. For this stock, I cannot find any Insider reports, but a number of analysts say there has been no activity at all for the last 6 months. The bank has shown some confidence by reinstating the dividend at the end of 2009 and increasing the dividend payment in 2010. The 2009 dividend was £.01 and the first one of 2010 was £.015. (This is a 50% increase in dividends, but from a very low level.)

When looking at US stock prices, I get a 5 year average low P/E of only 6 and a 5 year average high P/E of 12.4. The current P/E of 11.4 is closer to the high P/E, but it is also, on an absolute basis a rather low P/E. When I look at the yield, the yield is just 1.6%. Although the 5 year average is 6%, the yield on this stock, has been in the past around 3% to 4.5%. The current yield is low. However, the yield should recover as the bank does better.

In US dollar terms, I get a Graham Price of $34.52. The current stock price of $22.54 is almost 35% below the Graham Price. This shows a current good price. The other thing that shows a current good price is the Price/Book Value Ratio. The current ratio is 0.87 and the 10 year average is 1.79. This means that the current ratio is just less than 50% of the 10 year average. Any ratio that is 80% or lower than the 10 year average is a good ratio.

When I look for analysts’ recommendations, I find Strong Buys, Buys, Holds and Sells. I do not find any Underperform recommendations. The consensus is probably a Buy. (See my site for information on analyst ratings.) People mention that since Barclays bought Lehman Brothers, it is now a different bank as it is now an investment bank as well as a retail bank. Investment banks are considered more risky than retail banks. Analysts with Hold ratings do not see much movement in the stock price over the next 12 months.

As I said yesterday, at the current time, I will be holding on to the shares I have in this bank.

This is a bank. Barclays is a global financial services provider, engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services all over the world. Its web site is See my spreadsheet at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

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