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Just over a month ago, the FTSE 100 index hit a record high of 8,908.82 points on 3 March. As I write on Monday afternoon (7 April), it stands at 7,738.24, down 13.1% in five weeks. But many Footsie stocks have been hit much harder, such as the Barclays (LSE: BARC) share price.
Blame the Trump slump
Also on 3 March, Barclays shares hit a multi-year high of 316p, before easing back to close at 311.1p. By my calculations, this took the stock close to a 15-year high, reached following the collapse of the shares during the global financial crisis of 2007-09.
As Barclays shareholders, my wife and I were pleased to see this value play paying off handsomely for our family portfolio. Alas, our positivity didn’t last long, as the Barclays share price has plunged over the past two weeks.
As I write, the stock trades at 241.45p, valuing the Blue Eagle bank at £33.6bn. This means that the bank’s market value has crashed by around £10.4bn from its March high. This leaves this popular and widely held share down 23.6% from its 2025 peak. Ouch.
Despite this crash — which resulted from a global market sell-off worsened by President Trump’s trade tariffs — Barclays shares are still up by a quarter (25%) over the past 12 months. Nevertheless, this stock is now back to price levels last seen on Halloween (31 October 2024).
Barclays looks a bargain
It could be argued that the Barclays share price went too far, too fast in the run-up to this crash. From 5 August 2024 to 28 February 2025, the shares rose by more than half, up 51% in under seven months. However, after this steep slide, I see this stock as clearly undervalued today.
Trump’s trade war is likely to cause US (and global) economic growth to slow or even turn negative. After all, tariffs are simply taxes — and when taxes and prices rise, disposable income falls and consumer spending slows. What’s more, economists expect this trade war to lift US inflation and unemployment, further hitting the American public.
But even taking this gloomy economic outlook into account, Barclays stock looks mispriced to me. At 241.45p, the shares trade on a mere 6.9 times trailing earnings, delivering a bumper earnings yield of 14.5%. This means that Barclays’ dividend yield of 3.5% a year is covered almost 4.2 times by historic earnings.
To me, these resemble the fundamentals of companies in crisis, rather than those of one of the UK’s largest and best-capitalised lenders to homeowners, consumers, and businesses. Of course, a global downturn or full-blown recession would increase British banks’ bad debts and loan losses. Credit growth could also reverse. But I think these possibilities may already be fully baked into the Barclays share price.
If I had cash earmarked for investment and the Fool’s trading rules would allow, I would fill my boots by buying more Barclays shares now. However, we intend to pay off our mortgage when our low-rate home loan expires in September, so we can’t risk this cash. Nevertheless, I’d urge investors to consider buying low-priced stocks during this latest market meltdown!
