Wednesday, April 25, 2012

Barclays Bank PLC ADR

I own this stock (NYSE:BCS, LSE-BARC). I bought this stock in March 2000. I have in a US$ account. My gain in US$ is 2.4% per year. I got 6.3% per year in dividends. If I look at US$ to CDN$ changes over the same period of time, I have lost 3.1% because of the differences in the exchange rate. So really I am down some 0.7% per year. So really I have not gained anything, but I really have not lost or not lost much.

I still hope for a good future for this bank. The European Banks have been hit hard by the recent crisis and I do not see any quick turnaround. However, I still do hope for a turnaround. Until 2008, I was earning money on this bank. However, losing some 3% per year on currency really puts a dint in any possible gains. If I look at the difference in the exchange rate for UK pounds to Canadian dollars, I am losing 7% per year over the past 5 years. This is the problem with investing in foreign stock.

This stock is also hard to evaluate. The company reports in UK pounds and I hold it as an ADR from the NYSE. So looking at this stock I am dealing with UK pounds US dollars and Canadian dollars. By the way if you want a good site for currency exchange rates, I use x-rates. This site gives both current and historical exchange rates.

A couple of extra things you should know about investing in UK stocks is that the London exchange quotes stocks in pence. On my spreadsheet I am using pounds, but the stock would be quoted at 211 pence, not the £2.11 number I have quoted.

The other thing with this stock is that I get a big dividend in the first part of the year, which was declared at the end of the previous year. Other dividends paid during the year significantly lower. For example, the last dividend I got in 2011 was $0.062775 per shares. The first dividend I got in 2012 was at $0.187525. (This is a 66% difference.)

Because of difficulties, this bank cut dividends for part of 2009 and then restarted them. However, the new dividends were a lot less than the old ones. Dividends in 2009 were some 97% lower than for 2008. They started increasing the dividends again in 2010 with a very good 350% raise, but dividends in 2010 were still some 85% lower than for 2008. With another increase in 2011, dividends were down by 82% from 2008. It is expected that dividend increases over the next few years will be in the range of 20% per year.

The only good news in growth in the last 5 years is for book value. It has grown at the rate of 8.5% per year in UK£. The 10 year growth in book value is slightly lower at 7.7% per in UK£. (Over the past 10 years, I have only lost 3.7% per year in currency exchange between UK£ and CDN$.)

As far as growth over the past 5 years on this stock, there is none. However, there is some growth over the past 10 years. Revenue has growth at 5% per year in UK£. Earnings have grown at 3.8% per year in UK£. Cash Flow has grown at the rate of 5.9% per year in UK£.

As far as debt ratios goes, the current Debt Ratio is 1.10, which is good for a bank. However, the current Leverage and current Debt/Equity Ratios at 28.13 and 25.68 are rather high, even for a bank.

The Return on Equity Ratio for 2011 is decent at 7.1%. The 5 year median ROE is better at 14.4%. The ROE using comprehensive income is similar, with that ROE at 8.8% for 2011 and 14.4% as the 5 year median ROE.

At the moment I am holding on to the shares I have in this bank. This is about the only foreign shares that I own and I like to have at least something in foreign stocks.

One of the largest financial services groups in the United Kingdom, Barclays is engaged in banking, investment banking and asset management worldwide. Its web site is here Barclays. See my spreadsheet at 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.

1 comment:

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