Does the Barclays share price fall make it a no-brainer buy now?

What’s better than cheap bank stocks? Why, even cheaper bank stocks, of course. I think Barclays (LSE: BARC) share price in Euro today.

It all comes down to the latest mini bank crisis from over in the US. Well, we’ve got the real thing here, and our banks are done.

Well, that’s it. But I don’t see a global banking crisis at this point.

But that hasn’t stopped Barclays’ share price from falling. The price has lost 25% in the last few weeks. And it’s still down 30% in five years.

Banks are afraid

The latest scare has hit Barclays shares more than Lloyds Banking Group. But I would expect it, really.

Lloyds emerged from the 2007-08 banking crisis by turning to the UK retail market. But Barclays retains its interest in global investment banking.

As a result, it could suffer more from the possibility of a US banking crisis.

But there are two main reasons why I think Barclays has to prove itself. And why can it be FTSE 100best buy now.

For me, it all depends on liquidity and value.

Liquidity

A bank’s Common Equity Tier 1 (CET1) ratio shows core capital reserves, compared to total risk-weighted assets. In essence, it provides an indication of the amount of freely available capital that a bank should have to deal with a crisis.

In 2022, Barclays achieved a CET1 of 13.9%. It is after all capital returns, including stock buybacks.

It all looks strong to me. And the bank has easily passed all of the Bank of England’s stress tests over the past few years.

Evaluation

On the valuation front, UK banks have held roughly half the long-term price-to-earnings (P/E) ratio of the FTSE 100 for some time.

The latest Barclays share price has pushed the P/E for 2023 down below five now. And over the next two years, City experts think it could drop to four.

The forecast dividend yield has been pushed above 5%, and rising.

I don’t know if the dividend will come out. And if we have to face bank pressure this year, deductions could be one way to save cash. But I don’t see much chance of a real crisis down the road.

economic risk

The biggest danger is the economy.

Inflation in February rose to 10.4%, and we’ve already seen another Bank of England rate hike. There is a possibility that the UK could enter recession in 2023.

That could put a crimp in Barclays’ year. And it might make that prediction too soon. In fact, I think there’s a lot of optimism in Kota’s outlook right now.

So no, I don’t think the Barclays rates are a no-brainer buy.

But I still think I see safety built into the current stock price. It seems to me that, as always, the market has reacted to the risk that the bank is taking in 2023.

Barclays is very much on my list to buy next.