Barclays Bank PLC

What I would like to talk about today is the only foreign stock that I own. This is Barclays Bank (NYSE_BCS). It is hard to evaluate how well foreign companies are doing. Part of the reason is because of the currency exchange and part of the reason is how they report about their business in their financial statements. I had to look at some reporting outside the financial statements of Barclays Bank to figure out why US reports on this stock showed a much lower earnings in US$ than using Barclays earnings and the currency exchange rate would suggest.

I bought this stock in 2000 and according to quicken, I have made 4.9% return per year on this stock in US$. In currency exchange, I have lost 3.6% per year. However, since some 40% of the return on this stock is in Dividends that I received over the years, it is not clear how much I have really earned. Also, I have this stock in a US currency trading account and this avoids some of the problems with currency exchange. I have only taken out dividends from this account when the currency exchange has been relatively favorable to me.

The other thing is that this recession has been much harder on other countries than it has been on Canada. Also, banks in other countries have suffered greatly. This includes Barclays Bank. The last two years have been really bad years for this bank. In 2009, this bank suspended their dividends and only restarted the dividends in the later part of 2009. I received only 1 quarterly dividend payment in 2009.

If you look at my spreadsheet, the growth figures for this bank are generally awful. Cash flow and Return on Equity only look good because of extraordinary items. When the extraordinary items are taken away from earnings, the earnings go from 82 pence to 23 pence. That is earnings drop some 72%. The other thing that has happen is that the number of shares has increased some 73% since 2007. I think that the only good growth figures are for Book Value per share. Over the past 5 and 10 years, the book value per share has grown by 9% per year and 11% per year, respectively.

When you look at revenue growth, it looks good because revenue has grown over the past 5 and 10 years at a rate of 16.5% and 13.6% per year, respectively. However, if you look at revenue growth per share, you get a different story. The 5 and 10 year growth for revenue per share is 4% and 6.5% per year, respectively. The last thing I want to look at is the Accrual Ratio. The good thing is that it is negative. The other good thing is that the Operational Cash Flow is higher than the Net Income.

Tomorrow, I will talk about what the analysts say about this stock. I will continue holding my shares. I think that the worst is over with this stock.

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 www.barclays.com. See my spreadsheet at www.spbrunner.com/stocks/bcs.htm.

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.