What is BARC.L's Intrinsic value?

Barclays PLC (BARC.L) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, Barclays PLC's estimated intrinsic value ranges from $163.61 to $325.53 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $163.61 -49.5%
Dividend Discount Model (Stable) $325.53 +0.5%

Is Barclays PLC (BARC.L) undervalued or overvalued?

With the current market price at $324.00, the stock appears to be significantly overvalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Barclays PLC's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 2.07 2.41
Cost of equity 16.3% 21.8%
Cost of debt 5.0% 5.0%
Tax rate 17.2% 19.2%
Debt/Equity ratio 5.41 5.41
After-tax WACC 6.0% 6.8%

Valuation Methods

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 19.1%
  • Long-term growth rate: 4.0%
  • Fair value: $163.61 (-49.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 21.8% (Low) to 16.3% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $208 to $443
  • Selected fair value: $325.53 (0.5% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $47136M
Enterprise Value $337363M
Trailing P/E 5.80
Forward P/E 7.33
Trailing EV/EBITDA 0.00
Current Dividend Yield 287.40%
Dividend Growth Rate (5Y) 24.67%
Debt-to-Equity Ratio 5.41

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Dividend Discount Model (Multi-Stage) 57% $32.72
Dividend Discount Model (Stable) 43% $48.83
Weighted Average 100% $233.00

Investment Conclusion

Based on our comprehensive valuation analysis, Barclays PLC's weighted average intrinsic value is $233.00, which is approximately 28.1% below the current market price of $324.00.

Key investment considerations:

  • Historical dividend growth of 24.67%

Given these factors, we believe Barclays PLC is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.