Should I buy Barclays shares for my portfolio after its Q4 earnings beat?
Barclays‘ (LSE: BARC) shares are up this week after a Q4 trading update saw it beat earnings expectations. Statutory profit before tax (PBT) came in at £1.9bn, up from £1.7bn a year earlier and ahead of consensus expectations of £1.72bn. This brought its full year 2025 PBT to £9.1bn.
The results delivered a mixed but broadly positive picture, even as revenue of £7.1bn fell short of consensus forecasts. The group finished 2025 having met or beaten all of its main financial targets, posting a fullâyear return on tangible equity (RoTE) of 11.3%.
It posted a cost-to-income ratio of 61% and a solid capital position, while returning £3.7bn to shareholders via dividends and buybacks.
Looking ahead
With many finance sector stocks having already delivered years of stellar growth, it’s getting harder to keep that momentum flowing. Even this week’s strong results barely moved the needle for Barclays. Sure, long-term shareholders remain in a good position — but what does that mean for potential investors like me?
“The banking sector has been a major money maker for investors over the past two years and now needs powerful catalysts to sustain the upwards share price momentum“, said Dan Coatsworth, head of markets at AJ Bell.
In general, analysts’ reactions have been cautiously optimistic. Many have highlighted the strong fullâyear delivery, capital strength and attractive capitalâreturn story.
But while ratings are largely in the Outperform or Buy categories, some flag the Q4 revenue miss as a potential warning sign. Considering the shares are already up 234% in the past two years, it’s becoming increasingly difficult for Barclays to deliver on targets.
Worth considering?
In my opinion, the key debate now is whether Barclays still offers genuine growth and value after a strong rerating — or whether most of the easy money has already been made.
The bank has outlined aggressive new mediumâterm targets: RoTE above 14%, income pushing towards the lowâ30 billions and over £15bn of capital returns between 2026 and 2028. But that Q4 revenue miss is a reminder that delivering this depends on a benign credit cycle and resilient net interest income in a potentially falling rate environment.
With my portoflio already leaning heavily towards finance, I’ll give Barclays a miss. I believe the UK market offers better opportunities to consider at the moment, such as Melrose Industries.
Since reinventing itself as a pureplay aerospace and defence champion, it’s capitalised on the growing longâterm trends of air travel and defence spending. Profit margins are climbing fast as past restructuring pays off, and management targets further margin expansion and freeâcashâflow growth.
That combination of structural demand, operational leverage and improving cash generation gives the shares genuine multiâyear compounding potential.
My verdict
For my needs, Melroseâs growth potential looks more appealing right now â despite the aerospace industry’s cyclical risks. However, for those seeking more steady, reliable growth (with a side of dividends), Barclays is worth considering.
But why choose? Together, the two stocks would complement each other, offering a trifecta of stability, moderate income potential, and a dollop of growth. To build a truly diversified portfolio, itâs best practice to include various stocks from different sectors.
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More reading
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Mark Hartley has no position in any of the shares mentioned. The Motley Fool UK has recommended Aj Bell Plc, Barclays Plc, and Melrose Industries Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
