Up 85% but with a P/E of just over 8! Has the Barclays share price jumped the shark?

I was happy with the purchase last year Lloyds Banking Group (LSE: LLOY) but then I looked Barclays (LSE: BARC) share price and he couldn’t help but feel a pang of regret. My goodness, well done.

Shares in My Lloyds have recently fallen 12.92% for the week as the car mis-selling scandal looks set to spiral out of control. They are still up 34.03% for the year but that is nothing for Barclays.

Barclays shares are up 85.29% over the past year and without worrying about auto finance, they are up 7.82% in what has been a tough month for the FTSE 100. Is it all too much?

Maybe I shouldn’t have bought Lloyds shares!

I always knew that Barclays had the potential to grow faster than Lloyds, as it held on to its investment arm after the financial crisis. It has a thriving US credit card business, too.

That adds more whizz, something Lloyds lacks as it sticks to the nuts and bolts of UK personal and small business banking.

It would be good if the managers were not always confused about bad sales. Lloyds was hit hard by PPI, too. I don’t expect car finance to cost another £23bn, but it should know better by now.

Barclays has had its own regulatory problems too, mostly in the US. On October 1, it agreed to pay $4m for violating US Commodity Futures Trading Commission (CFTC) rules on reporting exchange transactions.

That’s part of its $361m bill to settle US Securities and Exchange Commission charges over excessive securities issuance in 2022. Given the strict US regulators, there will be more of these, but Barclays pulls them off better than Lloyds.

Barclays makes a lot of money. On 24 October, it reported an 18% jump in Q3 pre-tax profits to £2.2bn. That beat forecasts by £2bn, helped by higher income and lower impairment.

This FTSE 100 bank comes into its own

Investment banking funds are beginning to grow, and credit and trading activity is increasing.

Lloyds has a high trailing yield of 5.16%, although it has been boosted by recent share price declines. That easily beats Barclays at 3.38%. However, markets see Barclays as having £10bn in cash to distribute between now and 2026, measured by share buybacks.

Both Lloyds and Barclays could benefit as interest rates start to fall – assuming they do. This will squeeze interest margins, the difference between what banks pay to savers and charge borrowers. On the other hand, lower interest rates may stimulate mortgage lending.

With its exposure to the US, Barclays could be on the way if the US Federal Reserve fails to establish a soft spot, or the presidential election brings the horrors of the unknown. However, despite its good performance, the stock still looks overvalued with a price-to-earnings ratio of 8.74. That’s only a smaller price than Lloyds at 7.06%.

Barclays didn’t jump the shark. Nothing much about its outstanding performance and I will buy its shares in November. Better late than never. As for Lloyds, I will finish you hard. It still looks like a solid buy and a long-term hold to me.