AMP Ltd (ASX: AMP) shares have been absolutely hammered in 2019 and are down 22.47% as of today’s close.
But are the Aussie wealth manager’s shares undervalued or simply worth less than they were at the start of the year? The answer is probably a little bit of both.
Let’s dive in and see whether AMP could land in the buy basket next year.
Why AMP shares have been hammered this year
The AMP share price has been in a slump for the best part of 18 months.
The Aussie wealth manager was arguably the hardest hit by the 2018 Financial Services Royal Commission as it lost its CEO and Chairman amid the “fee for no service” scandal.
AMP has also been hit by significant remediation fees for customers affected by the scandal and has been under regulatory scrutiny since.
Is the Aussie wealth manager undervalued?
Despite its troubles, there are signs that AMP is righting the ship, so to speak. With a new CEO at the helm and a renewed strategy, the Aussie wealth manager could be finally getting itself back on track.
Of course, the higher compensation costs and lingering reputation damage have hurt AMP and it may not return to its glory days. But there’s also a case that it has been oversold and could be a good value buy in 2020.
AMP shares are down 22.47%, while fellow ASX wealth managers have been climbing higher this year.
While Magellan Financial Group Ltd (ASX: MFG) isn’t exactly a direct comparison, its shares are up 134.91% since the start of the year. In my view, that shows that ASX-listed wealth managers can still see strong gains when performance backs up their valuations.
Rival IOOF Holdings Ltd (ASX: IFL) has even climbed higher despite its 2018 Royal Commission woes. IOOF was under the microscope just like AMP as the regulator even pushed to have its executives deregistered. But IOOF has rebounded this year with a new strategy and its shares are up an enormous 57.87%.
The market does forgive, and I think if IOOF can recover then AMP shares could be a bargain buy ahead of a rebound next year.
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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.