The case for further gains

Even after the recent surge, Lloyds still trades at a very respectable price-to-earnings ratio of 15.93. For comparison, the FTSE 100 average is 16.4. So the stock can still be seen as undervalued relative to the broader index, or at least certainly not overvalued.

The business has been doing well financially, and if this momentum continues, the stock could follow suit. Its CEO noted in the Q1 results that “our differentiated business model remains resilient”, with gains seen in various divisions. The push to expand wealth management, insurance and other fee-based businesses should continue to help the overall group to outperform.

I think interest rates here in the UK will rise later this year. If they do, and indeed stay higher for longer than markets currently expect, it could provide another boost for Lloyd’s profits, particularly if loan losses remain subdued.

The other side of the coin

That said, Lloyds remains heavily exposed to the UK economy and housing market. A recession, rising unemployment or a meaningful fall in house prices would almost certainly increase bad debts and reduce demand for borrowing. If the Bank of England committee has to cut interest rates to try and help out, it could squeeze profit margins at exactly the wrong time.

Then there’s regulation. Lloyds has not yet fully settled the motor finance scandal, although it has set aside £1.95bn for a compensation scheme and dropped its initial legal challenge against the regulator’s redress plan. Any further issues with this case could not only knock profits but also investor confidence.

Making a call

I think it’s unlikely the stock would halve in value over the course of the coming year. The risks are there, but to trigger such a sharp move lower would need something seriously bad to happen.

Even though I say we might see 168p before 56p, I also don’t believe the stock will jump 50% in the next 12 months. The company is certainly doing all the right things, but the stock is no longer a screaming value buy. Now it’s getting closer to being fairly valued I believe the pace of appreciation for the share price will be a lot more measured.

Therefore, if an investor is looking for a high-growth pick, I think there are better ideas to look at. But if someone is targeting income (Lloyds has a dividend yield of 3.26%), or specifically wanting banking exposure, it could be one to consider.

Should you invest £5,000 in Lloyds Banking Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

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Jon Smith does not hold any positions in the companies mentioned.

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Going by the average of recent broker updates, I see a share price consensus for 121p. That would mean a further 8% above where Lloyds shares are now. And with a trend of targets being raised as new results come in, I think it could mean a fair bit more steady growth for Lloyds shareholders still to come.

Expert targets

Most published consensus averages come in a bit lower than my calculation, at around 118p. And that’s because of a persistent problem.

There’s been a low-end 53p price target on Lloyds shares for quite some time. It’s been stuck there for what seems like a couple of years, and today I can’t find any evidence of who’s behind it. It looks like it’s probably just something stale, never changed, and never removed from consensus.

So I’ve gone with only those targets set since Lloyds released its first-quarter results on 29 July — as they’re the ones based on the most up-to-date figures. And with the exception of Berenberg, whose analysts rate Lloyds a Hold, the others are Buys. In fact, Lloyds is still one of the most hotly-tipped stocks on the FTSE 100.

Do I share the enthusiasm? I do, but with some caution.

Before we get to the positives for Lloyds, let’s address the millstone hanging round its neck. Lloyds has set aside £1.95bn to cover motor insurance compensation claims. The final outcome keeps being delayed, but it hasn’t gone away. And there’s a fair chance the bill for Lloyds could be a good bit more than planned for.

Cracking performance

But aside from that, I’d say Lloyds has been performing about as well as a UK domestic bank could be expected to. Highlights from Q1 results include…

• Pre-tax profit of £2bn, from £1.5bn in 2025
• Underlying net interest income up 8.3% year on year
• Return on tangible equity (RoTE) of 17%, with a CET1 ratio of 13.4%

For the full year, Lloyds expects underlying net interest income of more than £14.9bn, with a RoTE over 16%. And it’s targeting a CET1 ratio at around 13%. To me, those are all signs of a bank pretty much doing everything right.

I really don’t think we’ll see Lloyds share price growth anywhere near the achievements of the past couple of years. And a forecast 3.3% dividend yield might not be exciting enough to raise anyone’s blood pressure.

But I rate Lloyds as a great company trading at a fair price, with steady growth potential. And that’s what billionaire investor Warren Buffett has always urged us to seek.

For growth investors looking for more, I think there are better considerations out there. But as a steady cornerstone for a long-term Stocks and Shares ISA, I rate Lloyds as one to consider, among a key handful of others…

Should you invest £5,000 in Lloyds Banking Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group Plc made the list?

Alan Oscroft owns shares in Lloyds Banking Group.

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Today, the bank stock trades at around 112p. But the question now is whether the easy money has already been made. And if not, should I be considering this stock for my own portfolio? Let’s take a look.

A bank firing on all cylinders

The underlying business is genuinely performing well. In the first quarter of 2026, pre-tax profits surged 33% higher to £2.03bn, smashing past analyst expectations of £1.84bn. At the same time, net interest income climbed 8% to £3.57bn on the back of a widening net interest margin, which now sits at 3.17%.

What’s more, it seems this strong performance is expected to continue. Management has nudged up its full-year guidance, with net interest income now on track to exceed £14.9bn, paired with a £7bn gain from the bank’s ongoing structural hedges that allowed it to continue enjoying higher interest rates even after the recent cuts.

Return on tangible equity guidance also remains at 16%+. And with Lloyds’ lending engine continuing to work well with a further £5.1bn of new loans issued, the analysts at UBS promptly issued a Buy recommendation following these results.

And pairing all this with the FCA partly suspending the motor finance redress scheme following legal challenges, compensation payments likely won’t land before 2027 at the earliest, removing some short-term uncertainty.

Needless to say, this is all rather positive. So does that make Lloyds an obvious stock for me to consider adding to my portfolio?

What’s the catch?

The continued strong progress and positive regulatory developments haven’t gone unnoticed. In fact, they’re the main reason why Lloyds’ shares have been outperforming lately. And it means that there’s a good chance the expected future growth’s likely already priced in.

When looking at the average consensus from institutional analysts, Lloyds’ shares are only projected to climb to around 125p by this time next year. While that still implies a solid near-11% growth from current levels, it’s hardly on par with the phenomenal returns investors have enjoyed over the last 12 months.

It’s also worth flagging that the motor finance situation remains a bit of a thorn in Lloyds’ side. A delay’s not the same thing as a cancellation.

The bank still has £1.95bn set aside to settle compensation claims. But with industry experts projecting that the total compensation payout could range £8.2bn-£11bn across everyone involved, Lloyds, being one of the most exposed players, might end up having to pay considerably more.

So where does that leave investors today?

The bottom line

Lloyds is a well-run bank delivering real earnings growth, and the longer-term income credentials remain solid. But at 112p, I think it’s unlikely that investors will see another round of 40%+ gains without another surprise earnings catalyst.

That doesn’t mean Lloyds’ shares aren’t worth considering. In fact, for investors looking for a more defensive way to diversify, Lloyds could still be worth considering. But for more growth-focused investors like me, there are likely better opportunities to explore elsewhere.

Should you invest £5,000 in Lloyds Banking Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group Plc made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.

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Investors have been spooked by fresh worries about the Iran war and AI bubble. The initial excitement over the record-breaking Space Exploration Technologies Corporation (NASDAQ: SPCX) IPO has also subsided, and US tech is on the rack generally.

At $124, SpaceX shares now (18 July) trade below their debut price of $135, and far below their short-lived peak of more than $200. As well as wider AI concerns, Elon Musk’s intra-planetary vehicle has been hit by the scrapped launch of the Starship V3 rocket, concerns over lack of profitability, and potential selling as investor lock-ups expire.

Why are US tech stocks bumpy?

SpaceX only floated a tiny fraction of its shares (less than 5%) and this creates price volatility. It’s also attracted aggressive short sellers. Even a wave of money from index-tracking exchange-traded funds hasn’t spared investors the agony.

SpaceX was always going to take time to find its market price. Investors shouldn’t be too downhearted by the latest US tech sell-off. Investors have periodically rotated into more defensive sectors, but they’ve always come back. That said, I believe it’s wise to think carefully before considering SpaceX. I simply have no idea how to value this stock today.

Yet while the headlines focus on big tech, it would be wrong to think that markets are suffering across the board. Lloyds shares have continued their strong run to rise another 6% in the last month. They’re now up more than 40% over 12 months and almost 145% over five years, with generous dividends on top.

All the big FTSE 100 banks have benefited from recent higher interest rates, which have helped them widen the margins between what they pay savers and charge borrowers. In contrast to SpaceX, which lost $4.94bn in 2025, Lloyds has been posting handsome pre-tax profits as this list shows.

• 2025 – £6.66bn
• 2024 – £5.97bn
• 2023 – £7.50bn
• 2022 – £6.93bn
• 2021 – £6.93bn

The retreat in 2024 and 2025 was largely down to provisions for the UK motor finance mis-selling scandal, rising operating costs, and a squeeze on lending margins due to mortgage market competition. Lloyds shares still powered on boosted by the £1.75bn share buyback programme that began in January.

Sentiment remains upbeat. The 19 analysts offering one-year share price forecasts produce a consensus price target of 123p. If correct, that would mark a 10.3% increase from today’s 111.5p. 

Of the 21 analysts giving stock ratings in the past three months, most are positive:

• Strong Buy: 12
• Buy: 1
• Hold: 6
• Sell: 1
• Strong Sell: 1

Lloyds is more expensive than it was, with a price-to-earnings ratio of 16.9, while the trailing yield has slipped to 3.27% as the shares rise. The struggling UK economy, slowing housing market and bank windfall tax concerns could all knock profits and performance, so we can’t assume things will be plain sailing from here.

Yet the numbers look good to me, with a modest forward P/E of just 11.2 and a forecast yield of 3.85% for 2026, rising to 4.55% for 2027. It may never fly to the stars like SpaceX but I still think Lloyds is worth considering today.

Should you invest £5,000 in Lloyds Banking Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group Plc made the list?

Harvey Jones owns shares in Lloyds Banking Group.

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Let’s discuss this further by looking at the fundamentals of these two popular UK shares using various valuation techniques.

Profit

Based on earnings, Lloyds appears to offer better value. It has a historic (2025) price-to-earnings ratio of 16.1. Rolls-Royce’s is an eye-watering 47.3.

Having said that, Lloyds’ multiple is higher than the FTSE 100’s four other banks.

Balance sheet

It’s a similar story looking at assets and liabilities. The bank has a price-to-book ratio of 1.35 compared to an astonishing 43.8 for Rolls-Royce. This is a reminder of how the pandemic decimated the latter’s balance sheet.

Among its peers, Lloyds is only beaten by HSBC.

But comparing valuations across sectors is misleading. Each industry has a different risk profile and capital expenditure requirements.

However, on paper at least, Rolls-Royce’s shares appear to be more expensive. This probably reflects, in part, its recent rapid growth and an expectation that this will continue. And it’s an engineering-cum-technology business. I suspect most investors think it has better growth potential than a 261 year-old bank.  

On the other hand, should there be any sign of a slowdown, its shares could tank.

Income

When it comes to dividends, Lloyds wins hands down. In 2025, it paid 3.65p a share giving the stock a historic yield of 3.2%. For 2026, analysts are expecting 4.31p. If correct, this implies a forward yield of 3.8%. However, I wonder if the bank will do better than this. Its 2025 payout ratio was 52%. A 4.31p dividend would equate to ‘only’ 43.5% of earnings per share (EPS).

With a 2025 dividend of 9.5p, Rolls-Royce paid around a third of its EPS to shareholders. Disappointingly, the stock has a trailing yield of 0.7%. Based on analysts’ 2026 forecasts, this rises to 0.9%.

Of course, dividends are never guaranteed.

My view

Looking ahead, forecasts for both companies are impressive. By 2028, Lloyds is expected to have increased its EPS by 96%, when compared to 2025. For Rolls-Royce, the anticipated rise is 75%.

But if I had to choose which is most likely to double its earnings before the end of the decade, I’d pick Rolls-Royce.

I acknowledge that Lloyds is a well-run company with a strong brand. But it’s much more UK-centric which, I believe, is a risk. And with 20% of the British mortgage market, it could be vulnerable to a rise in loan defaults should interest rates remain higher for longer. Or worse still, go up as a result of post-Iran inflationary pressure.

Rolls-Royce has more strings to its bow – currently aircraft engines, defence, and power systems. In future, it hopes to add small modular reactors to this list, assuming mini nuclear power stations prove to be commercially viable. This gives it better protection should we encounter some challenging economic headwinds, or if one part of its business struggles. That’s why I believe its shares are worth considering.

I can see why Lloyds might appeal to some income investors but, in my opinion, there are better higher-yielding opportunities to consider elsewhere.

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?

James Beard owns shares in Rolls-Royce Holdings plc.

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Here are three UK dividends stocks that could supercharge an income portfolio in the coming three years.

NatWest

NatWest Group (LSE: NWG) stands out as a highly compelling dividend to consider in the FTSE 100. It raised total dividends by 51% in 2025 to 32.5p per share, backed by profits up 24% last year.

Looking ahead, it’s guided for return on tangible equity (RoTE) above 17% in 2026 and over 18% by 2028. That should provide strong earnings coverage for rising payouts.

However, if UK interest rates fall faster than expected, RoTE would fall too, putting dividends at risk.

Analysts forecast dividends of 29p in 2025, 32.7p in 2026, and 36.5p in 2027, implying a forward yield approaching 7% by 2027.

JPMorgan expects NatWest to shift to a 50% ordinary dividend payout policy from 2026 (versus 40% consensus). That could deliver an 8% cash yield and roughly 11% total yield, supported by a £750m buyback programme.

Bellway

FTSE 250 housebuilder Bellway (LSE: BWY) has one of the strongest dividend growth profiles among UK mid-caps. Forecasts indicate dividends rising from 70p in 2025 to 78p in 2026 and 93.9p in 2027, representing 10%-20% annual growth.

This would lift the yield from 2.6% to around 3.8% over the period.

However, rising mortgage rates and high construction costs aren’t helping the story. If things don’t settle, tightening margins could threaten the dividend trajectory. 

Earnings are expected to grow 15% in 2026 and 21% in 2027, keeping payout coverage comfortable at around 2.5 times. With earnings forecast to grow 20% per year, return on equity (ROE) could reach 8.2% in three years.

Plus, the Bellway board has shown a willingness to increase payouts as the housing market recovers — just the kind of shareholder commitment that deserves a closer look.

Lloyds

Lloyds Banking Group (LSE: LLOY) is another high-yield bank with a progressive dividend policy and double-digit growth forecasts. Analyst projections show dividends rising from 3.59p in 2025 to 4.29p in 2026 and 4.84p in 2027, representing 13%-20% annual growth.

This trajectory would lift the dividend yield from 4.3% to 5.7% over the period, well above the FTSE 100 average of 3%-4%. EPIS is expected to nearly double from around 6p today to 11p by 2027, providing ample coverage for rising payouts.

But that dividend sustainability hinges on maintaining its CET1 capital ratio above 13% — a severe downturn in the UK market could force a dividend cut to conserve capital.

Still, with the bank’s cost-cutting programme and digital transformation gaining traction, it looks like a top option to consider for patient investors.

The bottom line

All three stocks combine above-average yields with 10%-20% dividend growth forecasts, making them attractive for income-focused investors seeking growth over the next three years.

NatWest offers the highest potential total return with buybacks, Bellway provides pure dividend growth in a recovering sector, and Lloyds promises steady, progressive income with strong coverage.

But never just focus on a few stocks. Broad sector diversification helps spread risk while keeping yields elevated. And there’s one more income stock I think could help do just that.

What income stock do we like better than NatWest Group Plc right now?

One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.

And the best bit is that you can see if for yourself, right now, absolutely free of charge!

No jargon. No hard sell. Just a clear look at an income share we think is worth your time.

Mark Hartley owns shares in Lloyds Banking Group.

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So far in 2026, the two giants have told very different stories. A £1,000 invested in Tesco at the start of the year is now worth around £1,055. But the same amount invested in Lloyds is now worth closer to £1,159.

So what’s driving that gap? And which one looks like the better investment from here?

Lloyds: a profit machine in full flow

Looking at the latest numbers, Lloyds’ pre-tax profits jumped 33% year-on-year to £2bn across the first quarter of 2026.

Net interest income grew 8% to £3.6bn, powered by a structural hedge that is now generating over £1.6bn every single quarter. And with a return on tangible equity of 17% coming in above management’s 16% target, leadership comfortably upgraded its full-year interest income outlook to £14.9bn.

In the words of CEO Charlie Nunn:

“In the first quarter of 2026, the Group delivered sustained strength in financial performance, growing our income, maintaining our cost discipline and delivering strong profitability.”

But of course, there are still some lingering risks for investors to watch carefully. The FCA’s motor finance redress scheme continues to play out, presenting a significant future drag on profits. And while elevated interest rates have helped the bank, this tailwind likely won’t last forever.

Tesco: steady, strong, and still going

Tesco’s first quarter of its 2027 fiscal year (ending in February) might look quieter on the surface, but the underlying resilience is compelling.

Group sales reached £16.8bn with UK like-for-like sales up 1.8% on top of an already exceptional prior year. Online sales grew 8.9%, while Tesco’s Finest premium product range delivered a 9% sales uplift.

As such, the group’s full-year underlying operating profit guidance was maintained at a range of £3bn-£3.3bn, with free cash flow expected to land between £1.5bn and £2bn.

That’s obviously positive news. But investors’ sentiment was ultimately dampened by continued soft performance in its Booker wholesale division. With a key national customer going elsewhere, like-for-like sales were dragged down by 3.2%. That’s not disastrous, but it does spark some understandable concern.

Which one wins from here?

Regardless of what the share price is doing, both businesses are performing well and backing their guidance with real cash generation.

Lloyds has delivered the bigger gain so far in 2026, and its structural hedge provides genuine visibility on earnings for years ahead. Tesco meanwhile, is the quieter compounder with a near-unassailable position in UK grocery backed by growing online and premium ranges.

As for which is the better investment, that ultimately depends on the goal. For income investors, Lloyds offers a compelling yield, while Tesco might have more appeal for investors looking for a defensive compounder against wider stock market volatility.

Personally, I think both businesses deserve a closer look.

Should you invest £5,000 in Lloyds Banking Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group Plc made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.

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Like all the big FTSE 100 banks, Lloyds has been boosted by higher interest rates. This allows it to expand its net interest margins, boosting revenues from new mortgages and other forms of lending.

Why has the FTSE 100 bank done so well?

Lloyds has also got lucky. It hedges against interest rate volatility, and older, low-yield agreements are continually rolling off, and being reinvested at a time of higher rates. In 2026, this is projected to generate £7bn worth of revenues. Sadly, it won’t last forever. At some point, interest rates are likely to fall.

The bank has other attractions. It’s now restored its reputation as a dividend machine. As a result of all that share price growth, the trailing yield has slipped to a modest 3.25%. Yet in the last three years, the board increased dividends by a generous 15% a pop. This suggests the income should keep rising. Lloyds is now forecast to yield 3.84% in 2026, rising to 4.53% in 2027.

Investors have been further rewarded by lucrative share buybacks, and feel comforted by its solid balance sheet, with today’s CET1 ratio of 13.4 giving it a “robust buffer against financial distress”, according to the bank.

Despite this terrific all-around performance, Lloyds still doesn’t look too expensive. Its forward price-to-earnings ratio is hardly demanding at 11.2 times.

Yet there are challenges. The struggling UK economy could limit growth prospects and potentially drive up bad debts, while our ailing housing market could hit demand for mortgages. Lloyds also has to pay the penalty for historic mis-selling of motor finance. It’s set aside £2bn.

I’ve done brilliantly since buying Lloyds in May 2023. Despite these challenges, I remain optimistic about its prospects. But what do the financial analysts say?

Where could the stock go next?

Some 21 analysts have delivered stock ratings in the past three months, and 13 call it a Strong Buy. There are just two sellers.

Further, 19 analysts have offered one-year price forecasts. The lowest, highest and median is in the table here:

If the most optimistic broker is correct, Lloyds shares could rise more than 20% over the next year, with dividends on top. We can dream. But let’s take that median figure of 8.9%. That would turn a £10,000 investment into £10,890. The 4.35% forecast yield would add another £435, lifting the total return to £11,325, which isn’t bad.

Investing is never guaranteed and Lloyds shares could just as easily fall instead. Athough with luck, the dividend should still come through. Ultimately, it’s for long-term that matters, and given the bank’s profitability, yield, buybacks and valuation, I think Lloyd shares remain well worth considering today.

The post By July next year the Lloyds share price could turn £10k into… appeared first on The Twelfth Magpie.

With the share price now near an 18-year high, many investors may be wondering if they missed the boat. But zoom out and Lloyds is still miles from revisiting its all-time high of over 500p.

Still, we can’t equate today’s responsible market with that of the wild days before the 2008 financial crisis. With tighter regulations and stricter oversight, it’s unlikely we’ll see levels like that again any time soon. 

So is Lloyds on the brink of an overvaluation-driven correction – or is a longer, drawn out rally just getting started?

The bears are getting restless

After the recent rally, some coverage now describes Lloyds as overvalued — or at least stretched relative to fair value estimates.

In these situations, the market often starts demanding near-perfect execution, which makes the share price more vulnerable to any disappointment on margins, provisions, or capital returns.

The ongoing motor-finance scandal remains the bank’s biggest challenge, because it impacts investor enthusiasm even when the underlying business is performing well.

A portion of the FCA’s proposed £9.1bn redress scheme has been partially suspended while legal challenges are heard. Sources suggest we may not know the final outcome until next year, or even 2028 in a worst-case scenario.

That’s a concern for investors like myself who are holding the stock for income. I’ve been enjoying the annual 15% dividend hikes – will they continue if Lloyds has to keep excess cash in reserve?

The dividend outlook remains strong but it’s not immune to this risk. If the final bill exceeds expectations, the money will need to come from somewhere. That could mean a dividend cut.

At the same time, if the court rules it below what Lloyds has already put aside, it would have surplus cash to reward shareholders. 

Why I still see a bull case

I’m still cautiously bullish, and not without reason. Lloyds is still producing solid shareholder returns, and some analysts think earnings and dividends can keep rising as the business benefits from strong domestic banking exposure and buybacks.

A few major brokers share my view, with the average 12-month price target around 123.7p – around 10% higher than today’s price.

In my opinion, a short-term correction is certainly possible — but it’s unlikely to indicate any serious structural issues.

The price-to-earnings (P/E) ratio of 16.5 doesn’t scream cheap but it’s not bloated either. If the motor-finance redress is settled without any hiccups and results continue to impress, I see no reason for an extended downturn.

My final thoughts

For a UK income investor, Lloyds still looks like a quality FTSE 100 bank with decent yield and strong shareholder returns. But the easy gains may already be behind it.

The shares now seem more sensitive to regulatory headlines and results-day guidance than to the core banking story alone. Long term, I’m not worried. But for a high-yielding opportunity today, I think there are other, better options to consider.

What income stock do we like better than Lloyds Banking Group Plc right now?

One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.

And the best bit is that you can see if for yourself, right now, absolutely free of charge!

No jargon. No hard sell. Just a clear look at an income share we think is worth your time.

Mark Hartley owns shares in Lloyds Banking Group.

The post Would it make sense to buy more Lloyds shares after a 14% price surge? appeared first on The Twelfth Magpie.

The company that I’ve been analysing is Lloyds (LSE: LLOY). So, how do I think the stock is placed ahead of a crunch month for investors?

How do you value bank shares?

Bank earnings can be lumpy. There can be all sorts of provisions, one-off charges, and accounting treatments that can distort the earnings picture from one period to the next.

The price-to-book ratio strips that out, comparing the share price directly to underlying net asset value, which is why it’s the standard tool for valuing bank shares.

According to the company-compiled analyst consensus published by Lloyds on 14 April 2026 (based on 18 models), the stock’s tangible net assets per share are forecast to rise from 57p in FY25 to 61.8p this year.

Against the price it traded at early on 6 July of 115.5p, that puts the forward price-to-tangible-book (P/TB) ratio at 1.87 times. Here’s how that compares to some key peers:

• HSBC: 1.65x
• NatWest: 1.4x
• Barclays: 1x
• Peer average: 1.35x

Lloyds looks to be trading at a premium to the peer average of 1.35 times. That premium reflects some real strengths of the bank including its leading market position and strong loan book.

But it also means there’s a defined level the market could re-rate down to if results disappoint. So what’s driving that premium in the first place?

What’s behind the numbers?

The same consensus document explains why the market is willing to pay up: return on tangible equity is forecast to climb from 12.9% in FY25 to 16.7% by FY26. That’s a strong trajectory for a UK domestic lender.

Even using HSBC’s premium — the highest in the peer group — as the upper bookend, the implied price still sits slightly below where the stock trades today.

In other words, on this measure, the market is already pricing this stock as rich as, or richer than, any of its domestic peers.

That’s a useful context for investors who are considering buying the stock today, even if there are some nuances to each bank’s value proposition.

What are the risks?

The same consensus data shows Q1 2026 impairment more than doubling versus Q4 2025 (£380m versus £177m), with the asset quality ratio nearly tripling (0.32% versus 0.14%) and return on tangible equity dipping slightly (14.6% versus 15.7%).

Having said that, none of these numbers are alarming me at their current levels.

If July’s results confirm credit quality is softening faster than forecast, I think we could see Lloyds fall to around 102p per share based on a reversion to HSBC’s P/TB ratio.

It’s not all doom and gloom

Given management reiterated full-year guidance last quarter, my own expectation is that results day is more likely to confirm the growth and returns trajectory than derail it.

But the premium the stock trades at relative to peers means there’s certainly room for disappointment. Despite the solid yield, I don’t think Lloyds is worth considering at the current price.

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Ken Hall does not hold any positions in the companies mentioned.

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