On September 11, 2023, Stephen Mcmillan, President and CEO of Teradata Corp (NYSE:TDC), sold 7,500 shares of the company. This move is part of a larger trend for the insider, who has sold a total of 27,500 shares over the past year and made no purchases.
Teradata Corp is a leading provider of database and analytics-related software, services, and consulting. Its solutions capture, store, manage, and analyze various types of data to enable its customers to make better business decisions. The company operates in two segments: Data and Analytics, and Marketing Applications. The majority of its revenue comes from the Data and Analytics segment.
The insider's recent sell has raised questions about the company's current valuation and future prospects. To understand the implications of this move, it's essential to analyze the relationship between insider trading and the stock's price.
The insider transaction history for Teradata Corp shows a clear trend of selling over the past year, with 15 insider sells and no insider buys. This could indicate that insiders believe the stock is currently overvalued, prompting them to sell their shares.
On the day of the insider's recent sell, Teradata Corp's shares were trading at $44.39, giving the company a market cap of $4.42 billion. The price-earnings ratio was 77.65, significantly higher than the industry median of 27.32 and the company's historical median price-earnings ratio. This suggests that the stock may be overpriced compared to its earnings.
According to the GuruFocus Value, which is an intrinsic value estimate based on historical multiples, a GuruFocus adjustment factor, and future business performance estimates, Teradata Corp's stock is fairly valued. With a price of $44.39 and a GuruFocus Value of $42.07, the stock has a price-to-GF-Value ratio of 1.06.
In conclusion, the insider's recent sell, along with the overall trend of insider selling over the past year, could be a signal that Teradata Corp's stock is currently overvalued. However, the GuruFocus Value suggests that the stock is fairly valued. Investors should carefully consider these factors and conduct further research before making investment decisions.
This article first appeared on GuruFocus.