Earnings season is upon us, which got me thinking about the potential value FTSE100 shares in other sectors.

I have one bank with a great reputation that I am deciding on today. That is because Barclays (LSE:BARC) is up more than 50% since the start of 2024. That got me thinking – could the British bank actually be a good buy?

Don’t get me wrong, Barclays is a well-known stock in the financial sector. The British bank has a market capitalization of £34 billion and is still growing in 2024.

I’m intrigued by banking, given where we are in the business cycle. Interest rates are high, the economy seems to be on a knife edge, but there’s also some optimism because the general election is behind us.

The recent rise in share prices reflected both the good health of banks in general and Barclays’ competitive position.

One thing that I really like is the return on equity (RoTE). The bank reported 12.3% RoTE for the quarter ended March 31, 2024, which is higher than the targets for 2024 and 2026. The cost-to-income ratio of 60% also showed me signs of management discipline, which is something I would like to see given the potential risks in the economy right now.

What does relative value look like?

I’m interested in how it compares to the FTSE 100 and other major banks such as NatWest AND HSBC.

Barclays currently has a 3.4% dividend yield, which is slightly below the Footsie average. However, compared to 4.8% for NatWest and 7% for HSBC, it doesn’t seem like such a great choice for dividend investors.

NatWest’s share price was also powerful, with gains of more than 50% in 2024. HSBC was more modest, hovering in the single digits.

One of the key valuation metrics for bank stocks is the price-to-book (P/B) ratio. It measures the price of a company’s stock relative to the value of its net assets on its balance sheet.

NatWest trades at a P/B of 0.74, while HSBC has 0.65. What about Barclays? A paltry 0.46. That means investors are paying 0.46p per £1 of net assets on the books.

To me, this means there is either a reason why investors are avoiding Barclays, or it could be an opportunity hiding in plain sight.

What are the disadvantages?

There are broader risks for banks that could come from lower interest rates. We could see more spending and less saving, reducing the funds available for banks to lend and make money.

But Barclays also has some risks. First, the company has struggled in recent years. Improving the size of its investment banking business is part of its three-year plan, and the bank is still working to turn things around.

Where now?

Barclays is due to report its half-year results tomorrow. I’ll be watching to see how well its investment banking division is doing, as well as monitoring the change in net interest margin.

If results are good and the outlook positive, Barclays could make it onto my ‘stocks to buy’ list once I get some spare cash, despite some question marks over future growth.