Barclays Shares Surge 68.4% YTD: How to Play the Stock Now

Barclays BCS shares have soared 68.4% so far this year, outperforming the industry’s growth of 45.5%. Moreover, the company has fared better than its peers, HSBC Holdings HSBC and NatWest Group PLC NWG. Year to date, HSBC shares have gained 42.7%, while NWG stock has rallied 61.1%.YTD Price PerformanceImage Source: Zacks Investment ResearchCan BCS stock continue its ongoing momentum, or is a correction imminent? Let us find out.Factors Driving Barclays StockBusiness Streamlining Initiatives: Barclays is streamlining its operations and focusing on core businesses. In August 2025, it agreed to sell its stake in Entercard Group to partner Swedbank AB for $273 million. Also, it acquired a U.S. credit card portfolio of $1.6 billion receivables, in partnership with General Motors Company. In April 2025, it announced a collaboration with Brookfield Asset Management Ltd to transform its payment acceptance business. In February 2025, BCS divested its Germany-based consumer finance business.Last year, Barclays acquired Tesco’s retail banking business, which is complementing its existing business and strengthening its position in the market. Also, it divested its Italian mortgage portfolio and sold $1.1 billion in credit card receivables to bolster the lending capacity for Barclays Bank Delaware in the United States.In 2023, Barclays acquired Kensington Mortgage, which bolstered its mortgage business in the U.K. Driven by these initiatives, the company’s profitability is expected to improve over time.Cost-Mitigation Efforts: Barclays’ initiatives to improve efficiency over the last few years have been bearing fruit, as evident from manageable expense levels. Though expenses rose in the past few years, they are expected to remain manageable as business restructuring initiatives continue to provide support.Barclays intends to undertake cost-saving actions. In 2024, its structural cost actions resulted in gross savings of £1 billion. Moreover, the company achieved its gross efficiency savings target of £0.5 billion for 2025 one quarter earlier than expected. By 2026-end, management expects total gross efficiency savings of £2 billion and the cost-to-income ratio to be in the high 50s.Robust Capital Position: Despite the uncertain macroeconomic environment, Barclays’ capital position remains solid. The company has been rewarding shareholders with enhanced capital distributions. It has been paying out dividends regularly and plans to keep the total dividend payout stable at the 2023 level, with progressive dividend growth.Moreover, Barclays plans to return at least £10 billion of capital to shareholders between 2024 and 2026, with a continued preference for buybacks. Furthermore, the company will commence a buyback plan to purchase shares of 25 pence each for up to £500 million, following the completion of the previous £1-billion plan ending no later than April 20, 2026. Driven by a solid balance sheet position, the company’s sustainable capital distributions will likely enhance shareholder value.Roadblocks in Barclays’ Growth PathSubdued Top-Line Growth: Barclays’ core operating performance remains unsatisfactory. Net interest income (NII) and net fee, commission and other income have been witnessing a volatile trend over the past several quarters due to a challenging operating backdrop. Though NII and net fee, commission, and other income rose in 2024 and the first nine months of 2025 on the back of structural hedges and the Tesco bank buyout, the uncertainty about the performance of the capital markets may weigh on the company’s top line, which makes us apprehensive about its growth prospects.Weak Asset Quality: Rising credit impairment charges remain a major concern for Barclays. The company witnessed a significant rise in credit impairment charges in 2020 to £4.8 billion, though there was a credit impairment release of £653 million in 2021. Nonetheless, the metric has been on the rise since 2022.As a result of a tough operating environment, credit impairment charges are expected to remain elevated in the near term.What Should Be Your Approach to BCS Stock Now?Barclays' robust capital position, focus on core businesses and cost-saving plans will continue to drive growth. Strong brand value and a global network are expected to act as tailwinds.In terms of its valuation, BCS stock appears inexpensive compared with the industry. It is currently trading at a 12-month trailing price-to-tangible book (P/TB) of 0.85X, which is below the industry’s 2.77X.Price-to-Tangible Book Ratio (TTM)Image Source: Zacks Investment ResearchBarclays’ stock is also inexpensive compared with HSBC and NWG. At present, HSBC has a P/TB (TTM) of 1.23X and Natwest’s P/TB is 1.41X.However, the uncertainty regarding the performance of the capital markets business is concerning. A challenging macroeconomic environment is likely to exert pressure on top-line expansion and result in a persistent rise in credit impairment charges. This makes us apprehensive.Moreover, analysts also seem bearish regarding the company’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for Barclays’ 2025 and 2026 earnings has been revised downward.Earnings EstimatesImage Source: Zacks Investment ResearchThus, while BCS stock is trading at a discount, investors should not rush to buy it now, given its not-so-impressive earnings outlook. Those who already own the stock in their portfolios can hold on to it because it is less likely to disappoint over the long term.Currently, Barclays carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. 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Click to get this free report Barclays PLC (BCS): Free Stock Analysis Report HSBC Holdings plc (HSBC): Free Stock Analysis Report NatWest Group plc (NWG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks