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After a very strong 278.0% return over the past three years, Barclays now presents an interesting valuation puzzle. The Excess Returns intrinsic value estimate points to the shares trading at a steep discount of about 48.4%, while traditional earnings based multiples look closer to about right for the current price of £4.95.
Barclays has delivered a 278.0% return over three years. This puts extra focus on whether the recent share price better reflects the underlying value or still leaves room for further gains.
The ongoing share buyback programme, which continues to reduce the share count, may support intrinsic value per share. However, any shift in investor confidence around the bank’s capital return capacity remains a key risk to that valuation.
Across Simply Wall St’s broader checks, Barclays screens as attractively priced in most areas, with a high value score of 5 out of 6. This suggests the shares lean cheap on several standard measures.
The issue now is whether Barclays’ current price already reflects this combination of strong historic returns and a seemingly supportive intrinsic value estimate, or if the stock still trades at a meaningful discount.
Find out why Barclays’ 34.6% return over the last year is lagging behind its peers.
Is Barclays Still Cheap on Excess Returns?
The Excess Returns model looks at how much profit Barclays can earn on its equity above the return that shareholders require. On this view, the key inputs are the current Book Value of £4.87 per share and a Stable Book Value of £5.66 per share, alongside a Stable EPS of £0.67 per share that is based on weighted Return on Equity estimates from 12 analysts. The model applies a Cost of Equity of £0.48 per share and an Excess Return of £0.19 per share, with an average Return on Equity of 11.82%.
Feeding these assumptions into the Excess Returns framework produces an intrinsic value estimate of about £9.61 per share, compared with the current share price of £4.95. On this methodology, that difference indicates the stock is 48.4% undervalued. Because Barclays is actively shrinking its share count through the ongoing buyback programme, the model’s view of value per share can remain supported even if overall profit stays flat.
On the Excess Returns view, Barclays stock currently screens as clearly undervalued relative to its estimated intrinsic worth.
Our Excess Returns analysis suggests Barclays is undervalued by 48.4%. Track this in your watchlist or portfolio, or discover 9 more high quality undervalued stocks.
Story Continues
BARC Discounted Cash Flow as at Aug 2026
Is Barclays Fairly Priced on Earnings?
The P/E ratio suits Barclays because earnings are a primary driver of value for a large bank. On this measure, the stock trades on about 9.7x earnings, which is below the wider banks sector average of roughly 11.4x and also under the peer group on about 13.3x. That places Barclays on a lower earnings multiple than many comparable banks at current prices.
The tailored fair P/E ratio for Barclays is about 10.4x, which reflects its specific mix of growth assumptions, profitability, size and risk. The current 9.7x level sits only slightly under this fair ratio, so the gap is relatively modest compared with sector and peer benchmarks. In practical terms, the market valuation on earnings looks neither stretched nor especially depressed for this stock.
On the P/E view, Barclays looks priced roughly in line with what would be expected based on its earnings profile.
LSE:BARC P/E Ratio as at Aug 2026
See what the numbers say about this price — find out in our valuation breakdown.
The Barclays Narrative: What Would Justify Today’s Price?
Simply Wall St Narratives pick up where the Barclays valuation puzzle leaves off. They spell out what would need to happen to Barclays’ future growth, margins and earnings for the stock to be worth materially more or less than today’s price, and they sit on the company’s Community page. Rather than leaning on a single multiple or model, each one lays out the assumptions behind its fair value so you can compare them with actual results over time.
One of the top community narratives on Barclays: 12% undervalued
“Combined with a price-to-earnings ratio of around 10, the price-to-book ratio suggests a puzzling lack of confidence in Barclays’ future profitability and earnings durability…”
Read one of the top narratives on Barclays
Do you think there’s more to the story for Barclays? Head over to our Community to see what others are saying!
The Bottom Line
For Barclays, the Excess Returns intrinsic value estimate points to a clear discount, while the P/E based view suggests the stock is priced about right relative to its earnings and peers. The broader valuation checks look supportive, so the question is whether the market gradually closes that gap or keeps treating the shares cautiously.
What matters most from here is whether Barclays can sustain earnings strength and capital returns in a way that convinces investors the current discount is too wide, rather than a fair reflection of its risks.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include BARC.L.
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