How Confident Are Insiders About Amber Road Inc (NYSE:AMBR)?
Amber Road, Inc. provides cloud-based global trade management (GTM) solutions in the United States and internationally. Amber Road is one of United States’s small-cap stocks that saw some insider buying over the past three months, with insiders investing in 700.59k shares during this period. Generally, insiders buying more shares in their own firm sends a bullish signal. A research published in The MIT Press (1998) concluded that stocks following insider buying outperformed the market by 4.5%. However, these signals may not be enough to gain conviction on whether to invest. Today we will evaluate whether these decisions are bolstered by analysts’ expectations of future growth as well as recent share price movements. Check out our latest analysis for Amber Road
Who Are The Insiders?
More shares have been bought than sold by Amber Road insiders in the past three months. In total, individual insiders own over 2.46 million shares in the business, which makes up around 9% of total shares outstanding.
Is Future Growth Outlook As Bullish?
From the outside, Amber Road’s future looks muted. Delving deeper into the line items, Amber Road is believed to experience a restrained level of top-line growth over the next year, which is expected to negatively impact the bottom line, with a growth rate of -0.33%. This indicates cost growth has outstripped revenue which is unsustainable. Although insiders may see prosperous times ahead given the current investment period, leading to their conviction to buy. Or else they may simply deem the stock to be undervalued by the negative sentiment.
Did Insiders Buy On Share Price Volatility?
An alternative reason for recent trades could be insiders taking advantage of the share price volatility. Volatility provides an opportunity to trade on market inefficiencies when the stock is under-priced compared to the stock’s intrinsic value. Amber Road’s shares ranged between $10 and $8.48 over the past three months. This suggests some volatility with a share price change of of 17.92%. Insiders’ purchases may not be driven by this movement but perhaps their view of the company’s growth in the future or simply their individual portfolio rebalancing.
Next Steps:
Amber Road’s net buying tells us the stock is in favour with some insiders, although the expected earnings growth challenges this conclusion, and the share price movement may be too trivial to cash in on any mispricing. Although insider buying can be a useful prompt, following the lead of an insider, however, will never replace diligent research. I’ve compiled two relevant aspects you should further research:
Financial Health: Does Amber Road 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 Amber Road? 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.
