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Should You Take Comfort From Insider Transactions At Aramark (NYSE:ARMK)?

Ray Foley

We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Aramark (NYSE:ARMK).

What Is Insider Selling?

It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.

View our latest analysis for Aramark

The Last 12 Months Of Insider Transactions At Aramark

Chairman Eric Foss made the biggest insider purchase in the last 12 months. That single transaction was for US$3.0m worth of shares at a price of US$32.46 each. So it’s clear an insider wanted to buy, at around the current price. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. Nonetheless, we consider it positive if insiders want to buy at around the current share price.

Happily, we note that in the last year insiders paid US$3.2m for 98.56k shares. But insiders sold 15.00k shares worth US$620k. In total, Aramark insiders bought more than they sold over the last year. They paid about US$32.47 on average. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price (US$32.51). The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

NYSE:ARMK Insider Trading January 27th 19

Aramark is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insiders at Aramark Have Bought Stock Recently

It’s good to see that Aramark insiders have made notable investments in the company’s shares. Overall, 2 insiders shelled out US$3.2m for shares in the company — and none sold. That shows some optimism about the company’s future.

Insider Ownership of Aramark

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 0.8% of Aramark shares, worth about US$68m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Aramark Insiders?

It’s certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. Insiders likely see value in Aramark shares, given these transactions (along with notable insider ownership of the company). Of course, the future is what matters most. So if you are interested in Aramark, you should check out this free report on analyst forecasts for the company.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.