This year, NatWest Group (LSE: NWG) shares have soared, rising 43.9%. They’re one of the best performers on the FTSE 100.

Yet even after a meteoric rise, they still look cheap on paper. At 316.9p, could it be that they’re one of the biggest bargains on the Footsie today?

It certainly seems that way. I’ve been keeping a watchful eye on NatWest’s share price movements. And June could be the time I make my move.

Valuation

I said NatWest shares look cheap on paper. Let me explain why. First, they trade on just 7.1 times earnings. Granted, a number of UK banks look like bargains at the moment. Nevertheless, it’s still way below the Footsie average of 11 and may signal that there’s value in the stock. It’s trading on 7.4 times forward earnings, which only reinforces this.

Second, its price-to-book ratio is just 0.7. This is a more common valuation metric for banks, where 1 is fair value. Again, going off that, NatWest looks cheap.

Value and income

There’s one thing I love more than a value stock. It’s a value stock that offers the chance to make passive income. NatWest does that.

Its dividend yield sits at a mighty 5.4%. The average Footsie payout’s 3.6%, so it trumps that by some margin. Its dividend last year totalled 17p, which was a 26% increase from 2022’s payout. Looking forward, its yield’s forecast to rise as high as 6% by 2026.

Dividends are never guaranteed and while that’s something investors must strongly consider, I’m confident NatWest will keep paying out. Its yield is covered nearly three times by trailing earnings. In February, it set in motion a £300m share buyback scheme, further showing its ambition to keep rewarding shareholders.

One big issue

But there’s one major caveat that could put investors off rushing to buy NatWest shares today. It’s a potential government sale. The government took a majority stake in the bank during the Global Financial Crash. However, since then, it’s been reducing the total number of shares it owns.

It now sits at less than 23m. But while it had plans to offload its remaining stake via a retail sale, that’s now been put on hold due to the election. The Labour party has also kept pretty quiet about what it plans to do with NatWest should it win the election. That’s another issue to consider.

That feeds more widely into the risk I see with the stock. The upcoming months will be volatile. We’re yet to have clarity on when the Bank of England will cut interest rates. It looks like it may be August. But any sign of that being pushed back could see the market throw a tantrum.

When rates do fall, that’ll pose an issue for NatWest too. That’s because its net interest margin will shrink.

A stock to consider?

But for a long-term play, I think NatWest shares look incredibly attractive at their current value. And even with ongoing uncertainty, Q1 still saw the bank post a relatively strong performance. Both lending and deposits were up, while impairment charges remained low.

I’m hoping it can carry this momentum into the rest of the year. If I had the cash, I’d buy some shares today.