Do Lloyds shares still offer value for money? Here’s what the charts say!

Lloyds (LSE:LLOY) shares have soared in worth as confidence throughout the FTSE 100 has picked up. At 51.76p per share, the excessive avenue financial institution has risen a formidable 22% in simply two months.

The financial institution’s a well-liked inventory with worth buyers. However does Lloyds’ share worth nonetheless look low-cost at present costs? And may I purchase the banking big for my portfolio?

Earnings

As a place to begin, let’s have a look at how low-cost the financial institution’s shares are in comparison with the worth of its predicted earnings. At this time, its price-to-earnings (P/E) ratio sits at 8.1 occasions, a long way beneath the FTSE 100 ahead common of 10.5 occasions.

However I’m not completed but. I’m additionally eager to see how the share worth stacks up in comparison with its rivals utilizing this metric. The corresponding readings of the Footsie’s different main banks may be seen beneath.

We discover that the Black Horse Financial institution trades at a premium to its opponents based mostly on anticipated income (Barclays and Customary Chartered each lead the desk on this respect).

Belongings

Subsequent, I’ll think about how Lloyds is valued relative to its e-book worth (complete property minus liabilities). With a price-to-book (P/B) ratio of 0.82, the corporate’s buying and selling beneath the worth watermark of 1. In different phrases, it’s buying and selling at a reduction to the worth of its property.

However Lloyds isn’t alone on this respect. Certainly, sub-1 multiples are frequent amongst UK-listed banks, because the chart beneath reveals.

We additionally discover that Lloyds’ P/B ratio is increased than these of most of its rivals. Solely HSBC has a better studying. So whereas low, the financial institution’s a number of isn’t business beating.

Dividends

The very last thing to contemplate is Lloyds’ dividend yield, which signifies the potential earnings that buyers might earn for every share. This 12 months, this sits at 6.1%, far forward of the three.7% common for FTSE 100 shares.

The financial institution’s yield additionally beats these of Barclays, Customary Chartered and NatWest. Solely HSBC surpasses it with its near-10% dividend yield.

Ought to I purchase?

Other than that dividend yield, Lloyds’ share worth doesn’t appear to supply eye-catching worth in contrast with its friends. However then once more, the financial institution does look low-cost in contrast with the broader FTSE. So what ought to I do subsequent?

It’s my view that the shares need to commerce at a reduction to the Footsie. Its excessive publicity to the moribund UK economic system supplies little scope for stable earnings progress. It might additionally battle to develop the underside line as rates of interest are seemingly fall from the center of 2024, pulling on its internet curiosity margin (NIM).

Indicators of restoration within the housing market are a great signal for the financial institution. It’s the nation’s largest house mortgage supplier with a market share close to 20%.

However I believe the dangers of proudly owning the corporate outweigh any potential advantages. In truth, if I had money to spend I’d fairly make investments it in rival HSBC’s shares. Whereas this banking big additionally has giant publicity to the UK economic system, I believe it might ship spectacular long-term returns as its core Asian markets develop quickly.