Barclays shares (LSE: BARC) have risen 38% over the past year, yet the stock continues to trade at a price-to-earnings ratio well below the FTSE 100 average, keeping the cheap-versus-risky debate alive among investors.
Are Barclays Shares Still Cheap After a 38% Rally?
The trailing twelve-month P/E ratio for BARC stood at 10.55 as of 14 June 2026, according to GuruFocus. That supersedes the 10.23 figure circulating in earlier commentary and sits well below the FTSE 100 average of 16.2, the comparison supporters of the stock most frequently cite.
The GuruFocus data adds a complicating layer, however. At 10.55, the current multiple is approximately 25% above Barclays’s own 10-year median P/E of 8.43. Relative to the index, Barclays shares look cheap. Relative to the bank’s own history, they are not.
The forward P/E sits at 9.17, with a price-to-book ratio of 0.83, according to Yahoo Finance key statistics. A sub-1 price-to-book ratio means the market still values the bank below its net assets, a characteristic of lenders where investors price in credit risk or structural return concerns.
Investment Bank Hits £4bn and Buybacks Mount
The Q1 2026 results provided fresh support for the bull case. Barclays reported a 19% rise in group profit, with equities trading bringing in £963m, according to Yahoo Finance. The same report put investment bank revenues at £3.9bn for the quarter, up 16% year-on-year.
Investing.com reported the Investment Bank division crossed £4bn in income for the first time in Q1 2026, up 4% year-on-year, delivering a 15% return on tangible equity for the division. The two figures differ slightly, likely reflecting different income line definitions; both point to a strong quarter.
The group’s return on tangible equity (RoTE) came in at 14% in Q1 2026, sharply above the 7.5% recorded in the final quarter of 2024. The London Stock Exchange announcement on 27 April 2026 also disclosed that the CET1 capital ratio edged down to 14.1% from 14.3% at December 2025, still comfortably above regulatory minimums.
On capital returns, the picture has moved on from the snapshot in earlier coverage. Barclays announced a £1bn buyback on 10 February 2026, which completed on 7 May 2026, and immediately launched a further £500m buyback commencing 8 May 2026, according to its Barclays investor relations page. The CEO noted in the Q1 results: ‘our capital position remains robust with a 14.1% common equity tier 1 (CET1) ratio and we are announcing a £500m buyback today.’
As context for the buyback pace, StockTitan, citing a Barclays 6-K filing, reported the bank repurchased 262,093,958 ordinary shares at a volume-weighted average price of 381.54p in its HY 2025 programme, for total consideration of approximately £1bn, leaving issued share capital of 13,909,748,427 ordinary shares. The full-year dividend for the period ended 31 December 2025 was 5.6p per ordinary share, paid on 31 March 2026.
Risks the Market Has Not Forgotten
The forward yield of 1.82% compares with a five-year average of 3.23%, suggesting buybacks have taken over from dividends as the primary return mechanism. Whether that suits any given holder depends on tax position and income needs.
Beyond capital returns, the bear case for Barclays shares rests on two points. First, the bank remains exposed to the UK consumer and business lending cycle. A deterioration in the UK economy would push up loan defaults, particularly in unsecured lending and credit cards. Second, investment banking revenues are inherently volatile. IPO and M&A pipelines that drove Q1 strength can dry up quickly, as history repeatedly shows.
The valuation gap versus the FTSE 100 average is real. So is the premium to Barclays’s own ten-year average multiple. Whether the 38% rally has closed the discount or merely reflected a genuine re-rating of the bank’s earnings power is what will determine the next leg.
The active £500m buyback, running since 8 May 2026, is the clearest near-term signal of where management believes fair value sits.
