Emerson Electric Insiders Sell US$6.3m Of Stock, Possibly Signalling Caution
Many Emerson Electric Co. (NYSE:EMR) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
Check out our latest analysis for Emerson Electric
Emerson Electric Insider Transactions Over The Last Year
The Senior VP, Lisa Flavin, made the biggest insider sale in the last 12 months. That single transaction was for US$4.4m worth of shares at a price of US$89.65 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$111. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 46% of Lisa Flavin's stake.
In the last twelve months insiders purchased 24.40k shares for US$2.1m. But insiders sold 67.76k shares worth US$6.3m. All up, insiders sold more shares in Emerson Electric than they bought, over the last year. The chart below shows insider transactions (by companies and 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders At Emerson Electric Have Sold Stock Recently
The last three months saw significant insider selling at Emerson Electric. In total, insiders sold US$692k 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 Emerson Electric
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Emerson Electric insiders own about US$237m worth of shares (which is 0.4% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At Emerson Electric Tell Us?
Insiders sold Emerson Electric shares recently, but they didn't buy any. Zooming out, the longer term picture doesn't give us much comfort. But it is good to see that Emerson Electric is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that Emerson Electric has 1 warning sign and it would be unwise to ignore this.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
