$C - Citigroup: an undervalued opportunity, or a red flag?

I’ve found that in this market, that using the Gordon Growth Model has created alpha in my portfolio. Dividends are motivating market movers.

I picked up some shares of $C - Citigroup at around $44 in late December, my model had a valuation of $54 per share. I was up 20% prior to SVB, which is $53. It fell back to $44 before bouncing. I’m currently up 5%.

Now I’m not comfortable buying at $54, as risk premiums for banks are up, and the market equity risk premium is around 7%, which I suspect will increase, in addition to a rising risk free rate. We’ve not had a year of negative returns in some time. However, I’m expecting to see $45 again and am considering taking a sizable position at the price.

With a 4.5% dividend, 7 EPS, and 6.7 P/E, this stock is cheap for the big banks. Wells Fargo has a comparable loan to deposit ratio and balance sheet, it trades at a 3% dividend, 3.5 eps, and 11 p/e. Citi had a new CEO and was trading at a management discount prior to SVB. With one of the highest LTD for the big banks and less home mortgage and retail trading exposure, I suspect this could be an undervalued hidden gem. $60 in 3-4 years assuming a -10% s&p year, is reasonable imo. I suspect that a 4% dividend on what is normally a stable stock like this will be difficult to find in 5 years.

Banking is sure to see some more trouble, but citi is already heavily discounted. Do you think it’s time to start shopping in the banking sector? Is Citigroup an opportunity or a sign that things are going to get really bad?