Barclays(NYSE: BCS) stock made big gains Tuesday, ending the trading session up 11.7%, according to data from S&P Global Market Intelligence.
The British banking and financial services company announced its fourth-quarter results before the market opened, reporting earnings that fell short of Wall Street's target. It posted a net loss of roughly 111 million pounds (roughly $140.1 million) on sales of 5.6 billion pounds (roughly $7.07 billion). The average analyst estimate had called for it to post a profit of 60.95 million pounds (roughly $76.9 million), but the unexpected loss was primarily down to restructuring costs.
The market is looking past Wall Street's weak Q4 report
Barclays' revenue declined 3% year over year in the fourth quarter, falling short of Wall Street's target. The company closed out the year with a return on tangible equity of 10.6%.
The bank also announced that it would be bringing its full-year dividend up to 5.3 British pence per ordinary share -- or 21.2 pence per American depositary share. Barclays distributes dividends twice per year, and Tuesday's announcement meant that it was roughly matching the first payment it made for 2023. While the company said that it plans to keep the total amount of dividends it pays out flat, it intends to increase dividends per share by reducing its outstanding share count through stock buybacks.
While the company's Q4 performance was mixed, management laid out plans to reduce costs and return value to shareholders that excited Wall Street.
What comes next for Barclays?
Barclays announced that it would be buying back an additional 1 billion pounds worth of shares. From 2024 through 2026, it plans to return roughly 10 billion pounds to shareholders through stock buybacks and dividends.
Through its cost-cutting and restructuring initiatives, the company estimates that it will be able to save up to 2 billion pounds by the end of 2026. The company also anticipates that it will be able to close out 2026 with a return on tangible equity above 12%. As part of its new strategy, management aims to focus more on lending to consumers and businesses.
Should you invest $1,000 in Barclays Plc right now?
Before you buy stock in Barclays Plc, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Barclays Plc wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of February 20, 2024
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.
