As far as cutting around the stub-out, what would be the best way to do so?

I figure I have to open it up to see the leak and to be able to get a second wrench on there while removing the arm. I also want to visually see that there are no leaks before fixing the wall.

What is this the right procedure for this replacement??

I would apreciate any tips as I cant find any info really online and in any books I have here at home.