Earnings results are a great way for investors to judge a company. They’re used to determine whether companies are on track with their initial guidance. These results can often radically move share prices in either direction, depending on the numbers reported. So, here’s an earnings preview for three FTSE firms reporting results this week.

The usual approach is to compare firms’ new numbers to those from prior years. But certain revenue figures may have been impacted by the pandemic, so it’s important to get context from pre-pandemic levels too. It can also be useful to consider whether a company can perform better than its previous year’s numbers, or if it can beat analysts’ annual forecasts. Analysts in the UK don’t always publish earnings previews for quarterly or half-year periods, but given their popularity, the shares covered below are exceptions. All of them have financial years that end in December.

Rio Tinto (H1 Earnings)

Rio Tinto (LSE: RIO) is an Anglo-Australian multinational company. It’s the world’s second-largest metals and mining corporation. The FTSE 100 firm’s main export is iron ore. Rio is set to reveal its H1 numbers for its six months performance ending June on 27 July.

Its earnings preview seems to indicate a slowdown in both its top and bottom lines. This is most likely due to the perpetual lockdowns in China that have been limiting construction activity. China is the group’s biggest customer, hence the gloomy forecasts. That being said, a sudden change in health policy in China could see Rio edge closer to its FY21 figures and could spell a healthy jump in its stock.

Barclays (Q2 Trading Update)

Barclays (LSE: BARC) is one of the UK’s biggest banks. It operates in many countries across the globe, and also operates an investment banking division. The bank is expected to disclose its Q2 figures for its three-month performance ending June on 28 July.

Analysts covering Barclays are expecting the bank to improve on its total income marginally this half, on a year-on-year basis. However, its most recent earnings per share estimate has been downgraded from 7.6p in the last week. The increase to its top line is most likely due to the effects of higher interest rates. Nonetheless, a decrease in investment banking activity from the current bear market is going to cause its bottom line to suffer. But if the dual-listed stock surprises investors with better than expected figures, a rally could be a possibility.

NatWest (H1 Earnings)

NatWest (LSE: NWG) is another UK bank reporting results this week. The group operates a wide variety of banking brands, offering personal and business banking, private banking, insurance, and corporate finance. It’s scheduled to unveil its H1 earnings for its six months performance ending June on 29 July.

Just as is the case with its sector peer, analysts are expecting the same trend. Alongside that, investors in its shares and the wider stock market will be paying attention to its remediation figure and number of late-stage loans to determine whether the UK is heading for a recession. The former is essentially the amount of money allocated as a buffer to cover potential defaults from customers.

The post Earnings preview: Rio Tinto, Barclays, NatWest appeared first on The Twelfth Magpie.

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John Choong has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Barclays (LSE: BARC) shares were on a good run before the Ukraine war. They’d more than doubled in less than two years, but then the Russian tanks rolled in. They now trade 7.24% lower than 12 months ago, and are down 19.85% over five years.

Investing in FTSE 100 banking stocks has been an uphill struggle ever since the financial crisis. Yet hope springs eternal, and investors can’t leave them alone. Given today’s rock bottom valuations, I find them hard to resist.

Now Barclays faces the prospect of a global recession, with the UK economy particularly vulnerable. As living costs rocket and central bankers put near-zero interest rate policies into reverse, personal and business debt impairments will inevitably rise. That’s especially so if we fall into recession, as seems increasingly likely.

FTSE 100 banks can widen margins

Yet rising interest rates will also allow banks to widen their net interest margins, the difference between what they charge borrowers and pay savers. This offers some respite.

Rising inflation has also boosted the appeal of companies that pay regular dividends, as the big banks now do. Barclays shares currently yield 3.7% and that’s forecast to hit 4.8%. Yet it’s still handsomely covered 3.8 times. I’ll take that.

Value stocks are in fashion, as growth falls out of favour. Barclays shares look dirt-cheap right now, trading at just 4.3 times earnings. Its price-to-book value is a mere 0.4. These numbers all tempt me, as do the bank’s operating margins of 37.2%, even if these are forecast to fall to 31.8% next year.

The big banks remain vulnerable to regulatory punishments. Barclays’ Q1 profits were hit by a whopping £523m litigation and conduct charge, after overselling US securities. This delayed its long-awaited £1bn share buyback for a second time and triggered a 7% drop in pre-tax profits to £2.23bn.

Investors treated this charge as a one-off and focused on the healthy 10% rise in revenues to £6.5bn, as Barclays’ corporate and investment bank benefited from market volatility. With further volatility inevitable, it should continue to do well.

I’d buy dirt-cheap Barclays shares today

The FTSE 100 is turning into a safe-haven stock market. It has fallen less than 5% this year, while the S&P 500 is in bear market territory after falling more than 20%. Barclays shares look more solid than most. As does today’s low entry price.

I don’t want to understate the risks. The UK property market looks vulnerable, which would hit UK-focused banks. With luck, housing shortages may prevent a full-blown crash, but more homeowners are bound to fall into arrears.

Despite the risks, I’d buy Barclays today, rather than wait to see how things pan out. Timing the market is impossible anyway. This is a stock I’d look to hold for a long time. Right now, Barclays shares looks like a great long-term buy-and-hold for my portfolio.

The post I’d buy Barclays shares today, then hold them for decades appeared first on The Twelfth Magpie.

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• Why Barclays shares could have a huge second half of 2026
• Up 50% in a year! That’s not the only reason I’d consider buying Barclays over Nvidia stock today
• Barclays shares could soon soar another 21%, according to the latest price target
• After a 160% rally, major brokers still see more gains for Barclays shares. Here’s why
• How many Barclays shares do I need to buy to get a £1,000 passive income?

Harvey Jones doesn't hold any of the shares mentioned in this article. The Motley Fool UK has recommended Barclays. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Recent results

Barclays’ full-year 2021 results were excellent across the board. For example, profit before tax reached £8.4bn, which was almost treble the £3.1bn achieved in 2020. Such a strong performance was enabled by the bank’s diversified business model. For instance, the Corporate and Investment Bank segment saw a profit before tax of £5.8bn. This highlights how the business model extends far beyond just its lending business, a factor that differentiates it from many other banks.

The strong results have also enabled the company to adopt a generous capital returns programme. This includes a share buyback programme of £1bn and a final dividend of 4p per share. As such, at the current Barclays share price, the dividend yields around 3.7%. This is in line with other FTSE 100 stocks and is certainly a strong reason to buy the shares. The share buyback programme should also have a positive effect on the share price.

Some risks

The current geopolitical tension in Eastern Europe is likely to have some negative effects for Barclays, especially as it’s a global bank. This is a reason why the Barclays share price fell around 9% last Thursday. The recent news that many Russian banks will be excluded from Swift, which is pivotal for the smooth transaction of money worldwide, could affect Barclays indirectly.

I’m also worried that the company’s strong investment bank performance may not be repeated next year. This is because capital markets were extremely active in 2021, with many initial public offerings (IPOs). As Barclays often acts as the underwriter in these IPOs, this large amount of activity benefited it greatly. As such, if there is a lower amount of capital markets activity in 2022, which certainly seems likely, Barclays may suffer. Lower profits are the likely result.

Is there room for the Barclays share price to rise?

After the bank’s recent results, the Barclays share price currently has a price-to-earnings ratio of around 5. This indicates to me that the shares are severely undervalued, and a drop in profitability for 2022 is already factored in.

It means I am continuing to buy Barclays shares for my portfolio as I think they are keenly priced at present. The current macroeconomic environment is also far more stable than during the peak of the pandemic, and interest rate rises could aid the bank’s profitability. Therefore, I’m willing to disregard the risks and buy more Barclays shares now.

The post After record profits, is the Barclays share price a bargain not to be missed? appeared first on The Twelfth Magpie.

More reading

• Why Barclays shares could have a huge second half of 2026
• Up 50% in a year! That’s not the only reason I’d consider buying Barclays over Nvidia stock today
• Barclays shares could soon soar another 21%, according to the latest price target
• After a 160% rally, major brokers still see more gains for Barclays shares. Here’s why
• How many Barclays shares do I need to buy to get a £1,000 passive income?

Stuart Blair owns shares in Barclays. The Motley Fool UK has recommended Barclays. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

A terrific 2021 performance

Barclays has performed extremely well in 2021, and earnings per share are forecast to reach 34p for the year. This is significantly higher than every single year since 2008 and would put the bank on a price-to-earnings ratio of under 6.

Further, the investment banking segment of the firm has seen huge success over the past year, helping Barclays outperform its competitors. For example, in the third quarter, investment bank revenues surged by 14% year-on-year. This was driven by a surge in M&A deals and private equity buyouts, which have led to increased fees for Barclays. Nonetheless, there is the risk that such activity will decrease next year, and revenues will decline.

Even so, I think that any decrease in revenues from the investment bank can be made up for through the company’s lending business. This is because of the recent interest rise from the Bank of England from 0.1% to 0.25%. Such a rise should help make up for any lost revenues in the investment business. This will hopefully have a long-term positive effect on the Barclays share price.

The risks

Despite these positive signs, there are some things to watch out for. For example, 2022 profits are unlikely to reach 2021 levels. This is because this year’s profits include credit impairment releases of around £622m so far, which occurred because the impacts of Covid were not as severe as initially feared. Next year, there are likely to be some impairments, even though they are projected to be below historical levels. They will still have an adverse effect on profits, however, in comparison to the positive effect this year. This means that the current P/E ratio of under 6 must be taken with a pinch of salt.

Further, the impacts of Omicron may be severe, especially if businesses start to struggle. This could lead to a far higher default rate and cause Barclays to lose money. As such, in the case of additional restrictions the harm the economy further, the Barclays share price may be hit hard.

Why am I still confident about the share price?

While there are several risks, I think that these are mainly factored in to the Barclays share price, except for the prospect of a full lockdown. Further, over the next few years, I expect that interest rates will continue to rise, and this should have a positive effect on the profitability of the bank.

Further, after announcing an interim dividend of 2p per share earlier this year, the full-year dividend is forecast to total around 6p per share. This is equivalent to a yield of over 3%, another reason for me to buy the shares. As such, I’m very tempted to add more to my portfolio.

The post Here’s why the Barclays share price could be set to soar appeared first on The Twelfth Magpie.

More reading

• Why Barclays shares could have a huge second half of 2026
• Up 50% in a year! That’s not the only reason I’d consider buying Barclays over Nvidia stock today
• Barclays shares could soon soar another 21%, according to the latest price target
• After a 160% rally, major brokers still see more gains for Barclays shares. Here’s why
• How many Barclays shares do I need to buy to get a £1,000 passive income?

Stuart Blair owns shares in Barclays. The Motley Fool UK has recommended Barclays. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Since its lows in March last year, the Barclays (LSE: BARC) share price has already managed to double in value to reach 180p. This has been driven by the stronger-than-expected economic recovery, and a set of strong financial results. But with headwinds still remaining, can the Barclays share price rise further, or has it reached its peak?

Financial results

Barclays’ financial results have been extremely strong, and this has helped demonstrate the excellent recovery the bank has made. Last year, these results were aided by the investment bank, which helped enabled the group to maintain profitability despite the difficult economic environment. This year, it has been able to increase profits further, thanks to significantly smaller credit impairment charges.

Indeed, for the first half of 2021, Barclays was able to post a profit before tax of £5bn, in comparison to just £1.3bn in the same period last year. This was also far larger than profits in the first half of 2019, illustrating its strong recovery.

The strong performance has also enabled it to increase its shareholder returns, which has had a positive effect on the Barclays share price. This has included a further share buyback programme of £500m, and a dividend per share of 2p. As such, it’s clear that it is performing well, and hopefully, this will continue well into the future.

Risks

Of course, this does not mean that there are no risks. Indeed, as the bank itself has pointed out recently, “the outlook remains uncertain and subject to change depending on the evolution and persistence of the COVID-19 pandemic”. The current prominence of the Delta variant is therefore an issue for the business.

Furthermore, the current low-interest-rate environment is also challenging for banks, and this may be holding back the Barclays share price. At the moment, there is also no indication that the Bank of England will increase the base rate.

Finally, the competition, especially from fintechs, is a worry. This may lead to the firm losing market share, which would disrupt growth.  

Can the Barclays share price rise further?

Despite these risks, I believe that they are priced into the Barclays share price already. Therefore, I believe that the business is still underpriced. In fact, it currently trades at a price-to-earnings ratio of around 6 and a price-to-book ratio of 0.25. Even for traditional banks, which are often valued lower than the rest of the market, this is incredibly cheap. Accordingly, I feel that Barclays does have a large amount of upside potential.

But unlike some growth stocks, I wouldn’t expect it to rise overly quickly. This is because the company is currently not growing at a quick enough rate, and it has already clawed back many of its stock market crash losses. The risk of rising competition also remains a threat, which may hold the share price back. Accordingly, I’d buy more Barclays shares as a solid FTSE 100 stock, which pays a decent dividend, rather than a stock that will explode in the near future.

The post What’s next for the Barclays share price? appeared first on The Twelfth Magpie.

More reading

• Why Barclays shares could have a huge second half of 2026
• Up 50% in a year! That’s not the only reason I’d consider buying Barclays over Nvidia stock today
• Barclays shares could soon soar another 21%, according to the latest price target
• After a 160% rally, major brokers still see more gains for Barclays shares. Here’s why
• How many Barclays shares do I need to buy to get a £1,000 passive income?

Stuart Blair owns shares in Barclays. The Motley Fool UK has recommended Barclays. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.