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Is the IOOF share price in the buy zone?

The IOOF Holdings Ltd (ASX: IFL) share price closed 0.77% lower on Wednesday and is flat in morning trade, despite a positive update on its progress towards meeting APRA’s licence conditions.

What did IOOF announce on Tuesday?

In an after-market update, IOOF said an independent reviewer engaged by the company to review its ongoing status and quality of compliance with its APRA licence conditions had identified 145 actionable items.

These items sit within the Aussie wealth manager’s overarching initiatives that were required to be implemented for the June 2019 quarter.

APRA imposed a series of conditions on IOOF in December 2018, which were required to be in place by the end of June at the latest to reach full compliance.

Following the finalisation of the reviewer’s report, IOOF said that all 145 actionable items required for validation have been completed, as at year-end.

Additionally, four superannuation-related actionable items that were outstanding from the March 2019 quarter have also been completed by the group.

What else did IOOF announce?

As announced on 25 June 2019, the Aussie wealth manager has been progressing with its Board renewal processes and yesterday announced the appointment of Ms Michelle Somerville to the Board.

As part of its sweeping actions against IOOF, APRA required IOOF to refresh its Board after finding that the group had failed to act in the best interests of its superannuation members.

Are IOOF shares in the buy zone?

While the IOOF share price closed lower yesterday, the big money investors will be more concerned with what’s to come in the company’s August full-year results.

The IOOF share price is currently trading at $5.13 per share, marginally higher than its $5.03 valuation to start the year.

With a market cap of $1.82 billion it remains a big player in the wealth management space, but the share price has plummeted 38.6% in the last 12 months following a hammering in the 2018 Financial Services Royal Commission.

While some might see this as a cheap investment, I would put IOOF in the same basket as AMP Ltd  (ASX: AMP) as much more of a speculative play on semi-distressed equity rather than a strong fundamental buy.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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