UK stock report - Barclays

UK

Barclays rises for a third consecutive day, a three-day rise of 1.8% April 20, 2018 16:30 BST

NEWS BITES - EUROPE

Barclays PLC (L:BARC), the 3rd largest Bank by market cap in the United Kingdom, has risen GBX1.30 (0.6%) for a third consecutive day on Friday. This brought its three-day rise to GBX3.75 (1.8%), compared with the FTSE 100 Index which rose 142.1 points (2.0%) in the three days for a relative price change of -0.2%. Cumulative volume in the 3 days was 1.1 times the average 3-day volume of 47.2 million shares. The stock last traded at GBX215.50.

YEAR-TO-DATE

Barclays is good value by Price/NTA despite 7% price rise

Barclays PLC (L:BARC), lifted GBX14.01 (or 7%) year-to-date (YTD) in 2018 to close at GBX215.50. Compared with the FTSE 100 Index which fell 362.6 points (or 4.7%) in the quarter, this is a relative price increase of 8.7%. The stock is trading at a Price/NTA of 0.7 times. The Price/NTA is 0.7 times the sector average of 0.9; and is the 4th lowest in the Bank sector.

Highlights in today's Report:

SECTION 1 BULLISH SIGNALS

Fundamentals, Technicals, High Performance Indicators

SECTION 2 BEARISH SIGNALS

Fundamentals, Overvaluation [compared with sector average], Technicals, Low Performance Indicator

SECTION 3 PRICE VOLUME DYNAMICS

Present Value of GBX1000 invested in the past, Moving Annual Return, Beta & Alpha, Aggregate Volumes, Prices and Turnover Period

SECTION 4 RANKING

Global, Independent Ratings

SECTION 5 FINANCIALS

Financials Summary, Trailing 12 Months Dividends

SECTION 6 PROFILE

Activities, Industry & Sector, Top Management, Issued Capital

SECTION 7 REPORTED BUYING AND SELLING

SECTION 8 STOCK BUZZ

Litigation, Corporate Wire

SECTION 1 BARCLAYS BULLISH SIGNALS

1.1 Fundamentals:

Undervaluation [compared with sector average]:

+ Price to Book of 0.7 [0.9].

1.2 Technicals:

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 213.03 minus the 26-day EMA of 211.05 is positive 1.98 suggesting a bullish signal. Both EMA prices are rising, another bullish signal.

+ The 3.1% discount to 12-month high of GBX222.32 against the 22.7% premium to 12-month low of GBX175.64 suggests the stock continues to push for new highs.

1.3 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverGBP89.1 million (US$125.5 million)In Top 2%
Volatility %1.1In Top Quartile
Price/MAP2001.09In Top Quartile
Price/MAP501.02In Top Quartile

SECTION 2 BARCLAYS BEARISH SIGNALS

2.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 1.4%, divided by average yield of dividend yielding stocks in the FTSE 100 Index of 2.7% is 51.7%. This suggests the stock is overvalued in dividend yield terms.

+ Total Liabilities/EBITDA of 301.4 which compares unfavourably with the Joseph Piotroski benchmark of 5.

+ Net profit margin has averaged 8.3% in the last 3 years. This is lower than the sector average of 20.5% and suggests a low margin of safety.

+ As per the Du Pont analysis, Return on Equity is less than stellar at 2.0%. This is computed as net profit margin of 9.5% times asset turnover [sales/assets] of 0.02 times leverage factor [total assets/shareholders' equity] of 17.7. Also, this has deteriorated from 3.4% last year.

Du Pont AnalysisROEProfit MarginAsset TurnoverEquity Multiplier
Current Year2.09.50.0217.7
Previous Year3.415.40.0218.7

2.2 Overvaluation [compared with sector average]:

+ Return on Equity 2.0% [4.8%].

+ Return on Assets 0.1% [0.4%].

+ Dividend yield of 1.4% [1.8%].

2.3 Technicals:

+ The price decreased 0.2% in the last month. The fall was on volume of 1.1 times average for month.

2.4 Low Performance Indicator:

DescriptionValueRank In Market
Return on Assets [ROA] %0.1In Bottom 1%

SECTION 3 PRICE VOLUME DYNAMICS

3.1 Present Value of GBX1000 invested in the past:

+ The present value of GBP1,000 (PV1000) invested one year ago in Barclays is GBP1,067, comprising a capital gain of GBP52 and dividend reinvested of GBP15.

PV10001-week1-month1-year
BARC.L1,0109981,067
FTSE 100 Index1,0141,0441,035

+ The present value of GBP1,000 (PV1000) invested five years ago in Barclays is GBP1,025, including a capital loss of GBP88 and dividend reinvested of GBP113.

+ 5 years Multiplier in GBP = 1.025x

+ Compound Annual Growth Rate (CAGR) in GBP = 0.5%

Present Value of USD1,000 invested 5 years ago:

+ The present value of USD1,000 (PV1000) invested five years ago in Barclays is $US943, including a capital loss of $US161 and dividend reinvested of $US104.

+ 5 years ago GBP 1 equalled USD 1.53

+ 5 years Multiplier in USD = 0.943x

+ Compound Annual Growth Rate (CAGR) in USD = -1.2%

Apr 20, 2018: GBP 1 equals USD 1.41

3.2 Moving Annual Return

Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 3 of the last 5 years. An investment a year ago in BARC would have produced a return of 6.7%.

BARCClose (GBX)Dividends (GBX)Capital Gain / (Loss) %% YieldAnnual Return %
Apr 20215.535.21.56.7
1 Yr ago204.82325.61.827.5
2 Yrs ago163.016.5(32.1)2.7(29.4)
3 Yrs ago239.985.55.92.48.3
4 Yrs ago226.646.66(4.1)2.8(1.3)

Close 5 years ago GBX236.30

3.3 Beta & Alpha:

+ Beta: the Beta of Barclays stock is 0.6. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

+ Alpha: the Alpha of the stock is 2.0. The actual return of 1.77% exceeded the expected return of -0.3%, reflecting outperformance.

3.4 Aggregate Volumes, Prices and Turnover Period:

[Volume Index or VI in brackets; 1 is average]

+ London: BARC.L 41,349,994 [VI of 0.9] volume 99.92% of aggregate. Price: GBX215.50.

+ Xetra: BCY.ETR 21,901 [VI of 0.3] volume 0.05% of aggregate. Price: EUR2.47. Using the current exchange rate of EUR1 equals 87.6451GBX, The shares are at a 0.6% premium to the close price on London.

+ Aggregate volume: there were 41.4 million shares of Barclays worth GBP89.2 million traded today. The aggregate volume was 0.9 times average trading of 47.3 million shares.

The turnover rate in the 12 months to date was 62.8% (or a turnover period of 1 year 7 months). This average length of ownership of the stock at 53.0 times the average holding period of 11 days for stocks in the FTSE 100 Index suggests a larger number of core investors, making a long-term investment safer.

SECTION 4 RANKING

4.1 Global Rank [out of 47,666 stocks] and Rank in the Europe Region [out of 8,559 stocks]

DescriptionValueGlobal RankIn Eur Region
MCap (US$)51.8B25671
Total Assets (US$)1,590.3B317
Revenue (US$)37.6B354107
Net Profit (US$)(2.7B)42,1726,978
Return on Equity %2.025,7874,292
Net Profit Margin %9.512,0061,887
Price to Book0.65,718955
Price/Earnings20.110,7772,087
Yield %1.414,8942,833
US$* Change (1Year) %3.821,0144,463

Apr 20, 2018: GBP 1 equals USD 1.41

4.2 Independent Ratings

+ S&P Global Market Intelligence 100:

Barclays PLC was ranked 15 in SNL's list of Top 100 Banks by Total Assets in 2016; a deterioration over a year from rank 10 in 2015.

+ FT 500:

It is the 488th largest by profit in the FT Global 500.

+ Fortune 500:

It was ranked 284 by total revenues in the Fortune 500 annual list for 2017; a deterioration over a year from rank 181 in 2016.

+ Brand Finance 500:

It was ranked 13 in the Brand Finance list of the world's 500 Valuable Banking brands by brand value in 2015; unchanged over a year from the same rank 13 in 2014. Brand Finance valued the brand at US$14,179 million and ranked it Number 13 in Europe. Most of the brand valuation was for services such as credit cards.

+ Forbes 2000:

It is the 166th largest by revenue in the Forbes Global 2000.

+ BSS/News Bites:

It is placed 688/1372 in BSS News Bites' ranking of United Kingdom performers in the past year, a percentile ranking of 50.

+ Vanguard Total World Stock ETF 7517:

The stock was one of 7517 global stocks selected by Vanguard Total World Stock ETF (VT) who bought 278,109 shares in the period Nov 30, 2017 to Jan 31, 2018 worth $US56,168,729 at an estimated Volume Weighted Average Price (VWAP) of $US201.9666. As at Jan 31, 2018, the Vanguard Total World Stock ETF held 4,919,022 shares worth $US14,075,598 or 0.09% by value of the ETF's portfolio [Ranked 200 out of 7517 by value and 15 out of 314 for United Kingdom].

SECTION 5 BARCLAYS FINANCIALS

5.1 Financials Summary

Year endedDec 2017Dec 2016Dec 2015
Sales (USD B)37.838.419.7
Pretax (USD B)54.61.6
Net (USD)(2.7B)2.3B(69.1M)
EPS (GBP)(10.3)10.4(0.019)

Net profit slumped from US$2.3 billion in 2016 to a loss of US$2.7 billion in 2017. Earnings Per Share (EPS) fell from GBP10.40 to -GBP10.30.

5.2 Trailing 12 Months Dividends

Trailing 12 Months ToValue (GBX)
20 Apr 20183
20 Apr 20173
20 Apr 20166.5
20 Apr 20155.5
20 Apr 20146.66

SECTION 6 BARCLAYS PROFILE

6.1 Activities

Barclays PLC provides various financial products and services in Europe, the United States, Africa, and Asia. It offers retail and commercial banking, credit cards, investment banking, wealth management, and investment management services. The companys products include current account and savings products, Woolwich branded mortgages, unsecured loans, protection products, general insurance, credit cards, Sharia-compliant products, installment finance and commercial property finance, commercial loans, and personal loans. It also offers money transmission, international and private banking, investment management, fiduciary, and brokerage services, as well as payment solutions and mobile banking services. In addition, the company provides fixed income, currency and commodities, foreign exchange, emerging markets, money markets, and credit services; equities, which include cash and equity derivatives and prime services; investment banking products and services that comprise financial advisory, and equity and debt underwriting; and advisory services. It serves individual, commercial, corporate, institutional, retail, and mass affluent customers. The company was formerly known as Barclays Bank Limited and changed its name to Barclays PLC in January 1985. Barclays PLC was founded in 1896 and is headquartered in London, the United Kingdom.

6.2 Industry & Sector

Classification LevelName of Sector
Industry GroupBanking Services
IndustryBanks
Economic SectorFinancials
Business SectorBanking & Investment Services

6.3 Top Management

The chairman is John Mcfarlane and the chief executive officer is Jes Staley.

6.4 Issued Capital

Based on 17,069,447,987 issued shares the market capitalisation is GBP36.8 billion (US$51.8 billion).

SECTION 7 REPORTED BUYING AND SELLING

Insider Buying and Selling

Reported Buying:

February 23: Barclays director buys

Barclays (L:BARC) director Mike Turner bought 10,000 shares worth GBP20,970 ($US29,249) on February 23. The purchase price was GBP2.10.

October 27: Barclays director buys

Barclays (L:BARC) director Ian Cheshire bought 30,000 shares worth GBP55,020 ($US72,121) on October 27. The purchase price was GBP1.83.

Reported Selling:

March 26: Barclays director sells

Barclays (L:BARC) director Ashok Vaswani sold 355,392 shares worth GBP732,463 ($US1,037,717) on March 26. The selling price was GBP2.06.

December 22: Barclays director sells

Barclays (L:BARC) director Bob Hoyt sold 25,000 shares worth GBP51,113 ($US68,322) on December 21. The selling price was GBP2.04. The shares hit a six-day low on the day.

SECTION 8 STOCK BUZZ

8.1 Litigation

April 20: Barclays: FCA and PRA conclude investigations

As announced on 10 April 2017 (the "April 2017 Announcement"), the FCA and PRA have been conducting investigations into Jes Staley, Group Chief Executive Officer of Barclays, and Barclays Bank PLC in relation to an attempt by Mr Staley in 2016 to identify the author of an anonymous letter. The FCA and PRA have now concluded these investigations.

In respect of Mr Staley, the FCA and PRA have recently issued confidential draft warning notices setting out their reasons for proposing enforcement actions. The FCA and PRA are alleging that Mr Staley's actions in relation to this matter represented a breach of Individual Conduct Rule 2 (requirement to act with due skill, care and diligence) and each have proposed that he pay a financial penalty. The FCA and PRA are not alleging that he acted with a lack of integrity or that he lacks fitness and propriety to continue to perform his role as Group Chief Executive Officer.

In accordance with the enforcement procedures of the FCA and PRA, Mr Staley now has a period during which he may review the draft warning notices and make representations to these authorities in relation to their content. Therefore, Barclays is not in a position to comment further on the draft warning notices, any discussions with the FCA and PRA or the timing of the final outcome of this matter.

In light of the draft warning notices of the FCA and PRA, the Barclays Board continues to be satisfied with its conclusions as set out in the April 2017 Announcement. The Barclays Board continues to have unanimous confidence in Mr Staley and continues to recommend his re-election as a Director at the Barclays Annual General Meeting on 1 May 2018. As set out in the April 2017 Announcement, the Barclays Board will determine what adjustment to Mr Staley' s compensation is appropriate once the FCA and PRA processes have concluded.

In respect of Barclays Bank PLC, the FCA and PRA have concluded that they will not take enforcement action in respect of this matter. However, they have proposed that each of Barclays Bank PLC and Barclays Bank UK PLC will be subject to requirements to report to the FCA and PRA on certain aspects of their whistleblowing programmes. Separately, in May 2017, the Barclays Board voluntarily commissioned independent reviews of Barclays' whistleblowing policies, processes and controls, in line with which certain enhancements have subsequently been made.

Barclays continues to provide information to, and cooperate with, authorities in the US with respect to this matter.

Source: London Stock Exchange

8.2 Corporate Wire

To view Recent Company Headlines, click here

April 04: Barclays completes Ring-Fencing Transfer Scheme

On 9 March 2018 Barclays was granted approval from the Prudential Regulation Authority and the High Court of Justice of England and Wales to implement the "ring-fencing" of its day-to-day banking services of Barclays using a legal process called a Ring-Fencing Transfer Scheme (the "Scheme") under Part VII of the Financial Services and Markets Act 2000.

The requirement to ring-fence day-to-day banking services, which must be completed by 1 January 2019, is one of the reforms brought in by the UK government, aiming to strengthen the UK financial system following the financial crisis that began in 2008.

Barclays has now implemented the Scheme and established the ring-fenced bank, Barclays Bank UK PLC on 1 April 2018.

April 03: Barclays: Total Voting Rights

In accordance with the Financial Conduct Authority's (FCA) Disclosure Guidance and Transparency Rule 5.6.1R, Barclays PLC notifies the market that as of 31 March 2018, Barclays PLC's issued share capital consists of 17,069,447,987 Ordinary shares with voting rights.

There are no Ordinary shares held in Treasury.

March 29: Barclays: Settlement of civil compliant with US DoJ re RMBS

Barclays has today reached a settlement with the United States Department of Justice ("DoJ") to resolve the civil complaint brought by the DoJ in December 2016 relating to residential mortgage-backed securities sold by Barclays between 2005 and 2007.

March 21: Barclays announces AGM

Barclays has announced its Annual General Meeting will take place on Tuesday, May 01.

Contact: 44-20-71161000

Physical Address: 1 Churchill Place, Canary Wharf, London, E14 5HP, United Kingdom

State/Province/Country: United Kingdom

Country of Incorporation: United Kingdom

Exchange: London Stock Exchange

ISIN: GB0031348658

L:BARC; LON:BARC; LN:BARC; BARC.L

PermID: 4297546630

RIC: BARC.L

Barclays Plc

Source: www.BuySellSignals.com