Wednesday, April 29, 2015

Barclays PLC ADR 2

On my other blog I am today writing why I hate online shopping continue...

Sound bite for Twitter and StockTwits is: Price maybe reasonable. It is interesting to hold a foreign bank. However, a lot are in difficulties and so is this one. So even if the price might be relatively reasonable according to the past, you have to wonder taking into account current risks? See my spreadsheet at bcs.htm.

I own this stock of Barclays PLC ADR (NYSE-BCS, LSE-BARC). 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. This is the last foreign stock that I own. Foreign diversification did not really accomplish much for me so I got out of almost all my foreign stocks.

The thing I notice when doing my review of this stock is that they seem to be paying a lot out in share options. Outstanding shares were increased by 0.36, 2.10% and 1.99% in the years of 2012, 2013 and 2014. Compare that to our Canadian Banks, like TD which increased their shares by 0.42% .0.46% and 0.27% in the years of 2012, 2013 and 2014. In most stocks I have looked at outstanding shares were increased no more than 0.50% for stock options in any one year.

There does not seem to be much insider ownership as a percentage of the outstanding shares, but then again this is a very big bank. The outgoing Chairman owns shares worth around £0.34M ($0.5M US$), and one director has shares worth around £10.1M (15.1M US$).

Since I am talking about the ADRs from the NYSE, I will look at price off this exchange. The 5 year low, median and high median Price/Earnings per Share Ratios are 5.73, 10.12 and 12.87. The corresponding P/E Ratios for 10 years are not much better. This is because there has been a couple of earnings loss years lately. Excluding these, the 5 year low, median and high median P/E Ratios are 8.92, 10.90 and 14.52. I get an historical median P/E Ratio of 10.05. So these last P/E Ratios are probably good.

The current P/E Ratio is 15.73 based on a stock price of $15.98 and a 2015 EPS estimate of $1.02 US$. It would seem from this testing that the stock price is relatively expensive.

I get a current Graham Price of $21.84 US$. The 10 year low, median and high median P/GP Ratios are 0.59, 0.74 and 0.89. These are rather low ratios as ratios of 1.00 or below are pointing to a good price. The current P/GP Ratio is 073 based on a stock price of $15.98. This stock price testing suggests that the stock price is reasonable.

I get a 10 year P/Book Value per Share Ratio of 0.69 and a current P/B Ratio of 0.77. The current P/B Ratio is some 11.5% higher than the 10 year P/B Ratio. The current P/B Ratio is based on a BVPS of $20.86 US$ and a stock price of $15.98. Note that the P/B Ratios have been very low since 2008. The historical median P/B Ratio is 1.85. This stock price testing suggests that the stock price is reasonable.

The 5 year median dividend yield is 2.45% and this is very close to the current dividend yield is 2.43%. This test suggests that the stock price is relatively reasonable. However, the historical dividend yield at 3.21% is some 24% higher than the current yield of 2.43%. This stock price test suggests that the stock price is relatively expensive.

When I look at analysts' recommendations I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month stock consensus price is $17.69. This implies total return of 13.13% with 2.43% from dividends and 10.70% from capital gains.

This is the second of two parts. The first part was posted on Tuesday, April 28, 2015 and is 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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