Should You Buy Team Inc (NYSE:TISI) When Insiders Do?
Team, Inc. provides specialty industrial services in the United States, Canada, Europe, and internationally. Team’s insiders have invested 3,829 shares in the small-cap stocks within the past three months. A well-known argument is that insiders investing more in their own companies’ shares sends an optimistic signal. The MIT Press (1998) published an article showing that stocks following insider buying outperformed the market by 4.5%. But these signals may not be sufficient to gain confidence on whether to invest. I’ve assessed two potential reasons behind the insiders’ latest motivation to buy more shares.
See our latest analysis for Team
Who Are Ramping Up Their Shares?
More shares have been bought than sold by Team insiders in the past three months. In total, individual insiders own less than one million shares in the business, or around 3.2% of total shares outstanding. The insider that recently bought more shares is Jeffery Davis (board member) .
Is This Consistent With Future Growth?
To the outsider, Team’s future looks muffled. Digging deeper into the line items,Team is expected to experience a restrained level of top-line growth over the next year, but a suggestively greater level of expected earnings growth. This could indicate large cost-cutting initiatives by the company to boost its earnings. Net buying could signal high insider confidence, perhaps due to their belief of sustainable growth. Or they may simply see the current stock price is undervalued relative to intrinsic value.
Did Stock Price Volatility Instigate Buying?
Another factor we should consider is whether the timing of these insider transactions coincide with any significant share price movements. Volatility provides an opportunity to trade on market inefficiencies when the stock is under-priced compared to the stock’s intrinsic value. Within the past three months, Team’s share price traded at a high of $17.95 and a low of $13.05. This indicates a fairly large volatility with a share price movement of 37.55%. This movement could potentially be significant enough to warrant insiders to accrue their shares.
Next Steps:
Team’s insider meaningful buying activity tells us the shares are currently in favour, which is consistent with the significant expected earnings growth, on top of a reasonable share price movement around the same time. However, while insider transactions could be a helpful signal, it is definitely not sufficient on its own to make an investment decision. I’ve compiled two important aspects you should further examine:
Financial Health: Does Team have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of Team? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
