Lloyds Banking Group (LSE: LLOY) is one of the largest financial institutions in the United Kingdom. Black Horse Bank currently serves about 30,000 customers with approximately 5,000,000 employees. Includes its top brands Lloyds Bank, Halifax, Bank of Scotland, Birmingham Midshires, Scottish widow, And MBNA. Lloyds is the largest mortgage lender in the United Kingdom, accounting for about one-fifth of the total market. And the origin of the group goes back to 1695, so it lasted for about three centuries and more. Yet Lloyds shares have risen in value over the past week, before taking off over the past five weeks.
Lloyds share price has jumped
Honestly, I was surprised by the weakness of the Lloyds share price from June to September. The FTSE 100 The index softened towards the end of the summer, closing above 6,900 points on September 20th. Yet LLOY stock was much worse. On June 1, the stock reached an intra-day high of 50.56p, their 52-week high. They then fell fairly steadily, closing at 42.41p on 8 September. Fall of .1.15p – or 1.1.1% in 8 days.
After this price reduction, I saw Lloyds buy a bargain. Therefore, on September 9, with the Lloyds share price trading at 42.5p, I said, “I would be happy to buy at the current share price.” As I write, the shares are hovering around 48.44p. That’s a profit of more than 6p – or 12.4% – in just one month. Still, it demonstrates the power of old school price investing: buying good business with low (or fair) share prices.
Of course, this is not a common sail for the Lloyds share price. Although the stock was up more than 80% in one year, it was a poor performer in the long run. Indeed, the stock has declined 7.9% in two years, 16.2% in three years and 7.6% in the last five years. So LLOY has been a short-term cherry, but a long-term lemon.
Can LLOY drive high?
At current Lloyds share price, Banking Behemoth is worth £ 34.5bn (a fraction of its previous glory). For me, the shares still look cheap today. They yield a price-to-earnings ratio of 7.4 and a bumper earnings of 13.5%. Also, they pay a dividend yield of 2.6% per year – 4.1% below the FTSE 100 forecast by 2021, but there is room for growth. But what could be a re-rating of LLOY higher drives and shares?
I suspect that the price of Lloyds shares may see some action on October 28, when the bank releases its Q3 interim management statement. Earnings per share may increase or bad ts may decrease. New life may enter the stock. So there could be news of higher dividends, which many Lloyd shareholders eagerly anticipate. Another event that could revive LLOY is the UK interest rate – which the Bank of England is already signaling could happen in early 2022. Lower interest rates limit the bank’s profits, so higher rates can mean higher interest margins for Lloyds.
I don’t have Lloyds stock today. However, I would buy at the current share price of 48.44p. That said, LLOY could own a rocky road বিশেষ especially if the Covid-1 mut changes again, more lockdowns are imposed, or the world economy goes cold!
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Cliffordcy has no position in any of the shares mentioned. Motley Full UK has recommended Lloyds Banking Group. The opinions expressed in the companies mentioned in this article may differ from those of the authors and therefore the official recommendations we make on our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Flower, we believe that considering a variety of insights makes us a better investor.