On 20 March, Barclays (LSE:BARC) shares hit their low for 2026 so far. The company’s shares had fallen by a disappointing 22% at this point.
Most of this occurred when the war in Iran started. However, the firm’s shares have enjoyed a decent rebound since.
In fact, its shares are up 14.9% since then. This hasn’t offset the decline in its shares since the start of the year, but it’s still nice for some of the company’s shareholders to recoup some of their losses.
However, if an investor miraculously timed the market perfectly and bought £10,000 worth of shares on 20 March, they would have a delightful profit of £1,486.
But it’s no longer 20 March, and many of you reading this will be wondering whether Barclays shares are still worth considering today.
Diversified or risky?
On the one hand, the great thing about Barclays’ business is how diversified it is. Unlike most other major UK banks, it has a very strong investment banking division. This accounted for almost half of its first-quarter income, with £4bn of turnover compared to the overall turnover of £8.2bn.
Moreover, this division also saw a good 4% rise from the same period in the prior year. Because of its diversified segments, the company is less impacted by interest rate changes than some other banks. So, if interest rates are falling, Barclays can rely more on its investment banking division.
On the other hand, though, diversification may be the bank’s weak point in current circumstances.
Investment banking is a cyclical business and is heavily influenced by global macroeconomic conditions. Speaking of these, they aren’t looking great right now with rising oil prices resulting from the war in Iran.
And while the Bank of England chose to hold interest rates last week (30 April), they warned that rate rises were likely to combat the inflation arising from higher oil prices.
Therefore, not being as exposed to interest rates may not be a favourable position right now. Other banks could benefit more from rising rates, as their net interest margins increase.
However, maybe Barclays shares are valued more nicely than its competitors?
Valuation
You’d think that after rising by 179.2% since the start of 2024, the firm’s shares would be a bit expensive.
You’d be wrong, though… its shares currently trade at a pretty cheap forward price-to-earnings (P/E) ratio of 8.4!
Let’s compare that to the forward P/E of some other UK banks for a second:
- HSBC: 10.9
- Lloyds: 10.1
- NatWest: 8.2
- Standard Chartered: 11.5
Looking at this, they’re all a bit more expensive than Barclays, except NatWest, which is only marginally cheaper.
Therefore, some of the risks mentioned above could already be priced in.
I also want investors to note that while the present economic environment may not be conducive for Barclays shares to thrive, over the long term, diversification could be its strength compared to other banking stocks.
As a result, today might be an attractive entry point for investors to consider buying the company’s shares.
