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The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage. The opinions expressed are those of the author and do not represent the views of TheStreet or its management.

NEW YORK (

Trefis

) --

Barclays

(BCS) - Get Barclays Plc Report

recently announced its performance for the full year 2010. Based on the better than expected performance of its sales and trading division, we have updated

our price estimate for the company to $18.30. This is still about 10% lower than the current market price of just over $21. It competes with other worldwide banking institutions and financial services group like

Citigroup

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,

Royal Bank of Scotland Group

(RBS) - Get Royal Bank of Scotland Group Plc Report

,

Bank of America

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,

UBS

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and

JPMorgan Chase

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.

Barclays has a strong presence in the U.K. retail and commercial banking industries, and has focused on expanding its operations to emerging markets such as India, China and the Middle East. It is also increasing its push in the U.S. especially following its purchase of Lehman Brothers' U.S. assets.

Sales and Trading Revenues Buoy Results

The sales and trading division revenues of $16.7 billion for 2010 represents almost one-third of Barclays' total revenue of $49 billion for the year. Debt trading contributed around $13.6 billion and the remaining $3.1 billion came from equity trading. Barclays had assets worth $215 billion in debt instruments and $40 billion in equity instruments deployed as a part of the sales and trading division.

We forecast earnings in the sales and trading division by looking at the assets deployed in the equity and debt markets and the yield the bank earns on this capital. Debt assets deployed by Barclays dropped significantly from its peak value of $315 billion in 2007 to almost $200 billion in 2009, but we expect assets to recover to near $290 billion in 2013.

This represents an annual growth of 10% for debt assets deployed and is fueled by the growing need for companies globally to raise capital to expand their operations after the economic downturn and a return of liquidity as markets recover from the recent downturn. This growth combined with an expected yield of about 6% gives Barclays most if its value. In fact, we estimate that sales and trading constitutes nearly 44% of Barclays' share price.

See our

full analysis and $18.30 price estimate for Barclays.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.