Own AMP shares? Here's what to watch for in the result next week

There are several areas to consider when assessing the wealth management company's earnings.

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AMP Ltd (ASX: AMP) shares are going to be in the spotlight next week as the company is due to publish its half-year result on 10 August 2023.

A financial report can be very influential about what investors think of the business, whether that's the numbers themselves, the guidance or commentary on current conditions.

These are the things I'll be looking out for during this ASX reporting season.

What will it report?

In the first quarter of 2023, AMP said its Australian wealth management (AWM) net cash outflows improved by more than 30% on the prior corresponding period, "driven by further stabilisation of Master Trust outflows".

Will AMP have managed to slow the outflows down even further? If it has, that could be a positive catalyst for the AMP share price.

I'll also want to see what has happened with AMP Bank's loan book. Has its loan book grown? Are arrears rising? Is its net interest margin (NIM) suffering from competition? Each of those elements could be an important factor for AMP Bank's earnings. The commentary regarding the NIM and arrears could have a sizeable influence on investor thoughts.

The company has been doing a lot of work on re-focusing the business, re-organising its structure and trying to lower costs. It could be important to see whether AMP is keeping a lid on costs or whether inflation is hurting.

As an ASX financial share, AMP shareholders may be very interested to know what sort of dividend they're going to get. With the company now making underlying and statutory profits, its normal operating businesses can fund payouts to investors. But there may also be additional capital returns from the business if there is any excess capital following asset sales.

What is the current AMP share valuation?

The upcoming AMP report is only for six months, so we need to take the full-year forecast into consideration.

Estimates on Commsec suggest that the financial company could generate 6.9 cents of earnings per share (EPS). That would compare to FY22 underlying EPS of 5.7 cents, which would be a rise of 21%, if that's what is reported.

At the current AMP share price, that would mean it's valued at 16x FY23's estimated earnings. Some investors might say that's a bit pricey considering the National Australia Bank Ltd (ASX: NAB) share price is valued at under 11x FY23's estimated earnings, and Insignia Financial Ltd (ASX: IFL) shares are valued at 10x FY23's estimated earnings.

Right now, according to Commsec, there is one analyst that thinks AMP shares are a buy, one that thinks it's a sell and three that think it is a hold.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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