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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell ESCO Technologies Inc. (NYSE:ESE), you may well want to know whether insiders have been buying or selling.
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, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
ESCO Technologies Insider Transactions Over The Last Year
The Executive VP, Gary Muenster, made the biggest insider sale in the last 12 months. That single transaction was for US$444k worth of shares at a price of US$74.00 each. That means that an insider was selling shares at around the current price of US$70.33. While we don't usually like to see insider selling, it's more concerning if the sales take price at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.
We note that in the last year insiders divested 14177 shares for a total of US$1.0m. Insiders in ESCO Technologies didn't buy any shares in the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
ESCO Technologies Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at ESCO Technologies. In total, Gary Muenster sold US$729k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership of ESCO Technologies
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It appears that ESCO Technologies insiders own 2.9% of the company, worth about US$53m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The ESCO Technologies Insider Transactions Indicate?
An insider sold ESCO Technologies shares recently, but they didn't buy any. And even if we look to the last year, we didn't see any purchases. But it is good to see that ESCO Technologies is growing earnings. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We're in no rush to buy! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for ESCO Technologies.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.