Friday, April 11, 2014

Barclays PLC ADR

I own this stock of Barclays PLC ADR (UK-BARC, NYSE-BCS). I bought this stock when Barrett took over in 2000. Barrett used to run Bank of Montreal in Canada. At that time it was a good dividend paying stock and I thought it would give me some geographical diversifications.

Although this bank has been in trouble since 2008, you can see the value of investing in dividend paying stocks. I have gained 3% per year on this investment. Not great mind you. However, I have not lost and I expect the bank to recover. Most banks outside Canada were hit a lot harder than Canadian banks were.

Dividends are paid in UK pounds, so dividends I get for my ADR shares, valued in US$ can vary because of currency exchange. Dividends are not paid like we get for most Canadian companies, including banks. For this bank you get one big dividend at the beginning of the year and then 3 small interim dividends. (This bank prior to 2008 used to pay one big dividend at the first of the year and then one small one at the end of the year.)

Because of the 2008 crisis, the dividends were decreased by 97% for 2009. They were raised by 350% in 2010, but that just means they were some 87% below the 2008 dividends. There were good increases in 2011 and 2012 of 22% and 18%, but then increases stopped. Dividends are still 81% lower than what they were in 2008 and it does not seem that they will catch up to 2008 dividends anytime soon.

This company had an EPS loss in 2012. For the financial year of 2013, the dividends paid were 175% of ESP. In 2013 the CFPS was negative. None of this gives me confidence of a dividend hike anytime soon.

Analysts seem to be expecting that dividends would go in in 2013 and now in 2014. However, the dividends did not change in 2013 from that paid in 2012. So far in 2014, the first dividend, which is always the largest paid in the year is that same as for 2012 and 2013.

The 5 and 10 years total return is very low at 0.73 per year for last 5 years and a loss of 6.57% per year for the past 10 years. The capital loss for the last 5 and 10 years is at 1.5% and 9.78% per year. The dividend portion of the total return is 2.23% and 3.21% per year over the past 5 and 10 years.

Outstanding shares have increased by 7.9% and 6.4% per year over the past 5 and 10 years. Most of these increases occurred in 2008 and 2009 at the rate of 27% and 36%. The shares have increased due to stock options, Share Issues and Conversion of Notes. It is the last two that have caused the considerable increases in 2008 and 2009. Revenues are up over the past 5 and 10 years, but not so much Revenue per Share, although if you use the 5 year running figures for Revenue they are somewhat better. Net Income and EPS are both down and Cash Flow is negative for 2013.

Revenue is up by 4% and 8.7% per year over the past 5 and 10 years. Revenue per Share is down by 5.6% and up by 2.1% per year over the past 5 and 10 years. The Revenue per Share is better using the 5 year running averages with RPS down by 3.4% and up by 4.1% per year over the past 5 and 10 years.

EPS is down by 61.9% and 56.6% per year over the past 5 and 10 years. Using the EPS 5 year running averages, the values are not so bad with EPS down by 15.4% and by 3.4% per year over the past 5 and 10 years. Net Income is down by 36.6% and 15% per year over the past 5 and 10 years. If you look at the 5 year running averages net income is down by 4.2% and up by 4.6% per year over the past 5 and 10 years.

However, what is not good is that although net income was positive for 2013, comprehensive income was negative. This is not a good sign. When the net income and comprehensive income are so different it calls question the quality of the earnings.

The Return on Equity for 2013 is very low at just 0.8%. The 5 year median ROE is also very low at 2.9%. As I said earlier the comprehensive income is negative so we do not have an ROE on it.

The Debt Ratio at 1.05 is generally where this ratio is for Banks. However, I have noticed that Canadian Banks have increased their Debt Ratios to 1.06. The Leverage and Debt/Equity Ratios for 2013 are 20.52 and 19.52. This is lower than they have been traditionally, but here again I see that the Canadian Banks are lowering these ratios into the 17.00 and 16.00 ranges. The better Canadian Ratios probably means that the Canadian banks are still more solid than this bank is.

This bank still seems to be struggling although analysts are still expecting better things from it this year. See my spreadsheet at bcs.htm.

This is the first of two parts. The second part will be posted on Friday, April 11, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

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.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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