STOCK ANALYSIS

Barclays PLC (BCS) Stock Analysis

Barclays PLC (BCS) Stock Analysis

Introduction

Europe's banking system is the largest in the world and holds consolidated assets three times those of the US system, and almost four times those of the Japanese. The outlook for the European banking sector looks bleaks for 2010 as the escalating European sovereign debt crisis places a cloud over the delicate recovery. Maximization of long term capital returns whilst minimizing risk of capital loss is the main objective of the portfolio investment. Firms that have been included in the portfolio fall in more than one industry segment that helps in diversifying the risks.

This section analyzes the financial performance of the Barclays PLC firm with respect to market indices performance of S&P500 index and FTSE 100 index. Barclays Plc earned revenues of £31,440 million ($48,600 million) in the financial year 2010. Firm achieved a growth rate of 8% compare to 2009 financials (Reuters, 2011). In the defined financial year, main business of the company generated from UK and Ireland region, which accounted for 40.7% of the total revenues (Data Monitor, 2011). However, increased lending by the company and increasing write-offs resulted in decline in share prices of the firm (Reuters, 2011).

BCS home country is United Kingdom; S&P500 index and FTSE100 has been taken for comparison as the UK market proxy in this analysis paper. Earning momentum of the company declined dramatically in the Year 2010, creating a direct decrease of approximate 8% in the ROE (Data Monitor, 2011). Main reason for the decrease in the ROE is devoted to firms increased lending. Long-term loans of the bank increased by approximate 1800 million pounds in order to acquire the Lehman Brothers Co. at the end of year 2008 (Reuters, 2011). In order to fulfill short-term needs, company increased its short-term loans by 2953million ...