Shares in leading blue-chip wealth manager AMP Limited (ASX: AMP) are down 11.4% in the past six months which is less than the 14.5% drop in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), but could be enough to tempt long-term investors to acquire stock.
For the half year to June 30 – AMP operates on a calendar year – the group reported a 12% rise in underlying profit to $570 million, which equated to underlying earnings per share of 19.3 cents and declared a 12% increase in the interim dividend to 14 cents per share (cps).
Amongst the highlights from the first half were solid improvements in assets under management (AUM) in the wealth management division which saw an increase of 13% to $114.6 billion; while the AMP Capital division recorded an increase in AUM to $158.5 billion.
Guidance provided by management for the full year suggested total controllable costs are expected to be contained within 2.5% to 3% before the benefit of a $50 million efficiency program with the business efficiency program expected to produce even larger gains in 2016.
According to consensus estimates provided by Morningstar, analysts expect AMP to earn 39.5 cps and pay dividends totalling 28.7 cps in 2015. Based on the interim results, this consensus forecast certainly looks achievable.
With AMP's share price now at a seven-month low of $5.66 these forecasts imply a price-to-earnings ratio and dividend yield of 14.3x and 5.1% respectively, which looks enticing on a comparative basis with AMP's peers such as QBE Insurance Group Ltd (ASX: QBE).