At $9, Barclays Stock Is Undervalued

At $9, Barclays Stock Is Undervalued

The company's revenues of $27. 9 billion in 2020 were slightly below the 2019 figure. While its Barclays core-banking operations saw negative growth due to interest rate headwinds and lower consumer spending levels, growth in the corporate & investment bank segment (sales & trading and investment banking) was able to almost offset the gap. The same trend continued in the first quarter of 2021 as well, with the bank reporting an increase of 3% y-o-y in its top-line. Further, the bank witnessed a significant drop in its profitability figures in 2020, due to a build-up in provisions for credit losses. However, it has seen a favorable decrease in its provisions for credit losses over the recent quarters, including the first quarter of 2021. This resulted in an adjusted net income of $2. 35 billion in Q1 – almost three times the year-ago period. Moving forward, we expect the corporate & investment bank revenues to normalize with recovery in the economy. But, it will take some time, and till then the segment will continue to dominate its quarterly results. Further, the core banking revenues are likely to benefit in 2021 with improvement in the consumer spending levels, however, the interest