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Lower Revenues Remain Concern for Barclays: Time to Sell?

Shares of Barclays PLC BCS have lost 6.1% in a year’s time, as against 23.4% growth of the industry it belongs to. Although, the company’s restructuring and streamlining efforts have been successful in lowering expenses, revenue growth continues to remain muted owing to weak capital market performance and low interest rates.

Moreover, litigation matters remain a near-term concern for the company.

The company’s Zacks Consensus Estimate for the current-year earnings have also been revised 6.6% downward over the last 30 days, reflecting analysts’ pessimism regarding its earnings growth potential. As a result, the stock currently carries a Zacks Rank #5 (Strong Sell).

Given the concerns surrounding the company and downward estimate revisions, the stock has limited upside potential.

Barclays’ revenues have been under pressure for the past few years. The company’s core operating performance indicators like net interest income, net fee and commission income, and net trading income have not displayed any significant improvement due to dismal capital markets performance as well as the low interest rate environment.

Moreover, Brexit is likely to have an unprecedented adverse impact on the company’s financials in the quarters ahead.

Barclays’ bottom-line growth is also likely to be affected due to the litigation issues which the company continues to face. Though the company has been successful in resolving certain issues over the past few years, some regulatory and legal restrictions still remain headwinds. These are expected to limit its flexibility in the near future.

Stocks Worth Considering

A few better-ranked stocks in the finance space are First Bancorp FBNC, Farmers Capital Bank Corporation FFKT and Capstar Financial Holdings, Inc. CSTR, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

First Bancorp’s earnings estimate has been revised 9.7% upward for the current year over the last 60 days. In the past year, the company’s share price has been up 45.1%.

Farmers Capital Bank’s earnings estimate for the current year has increased 5.3% over the last 60 days. The stock has risen 12.2% in a year.

Capstar Financial’s earnings estimate has been revised more than 70% upward over the last 60 days. The company’s shares have rallied nearly 8.8% over the past year.

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