Insiders at Eaton Corporation plc (NYSE:ETN) sold US$4.0m worth of stock, possibly indicating weakness in the future
In the last year, many Eaton Corporation plc (NYSE:ETN) insiders sold a substantial stake in the company which may have sparked shareholders' attention. 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, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
Check out our latest analysis for Eaton
Eaton Insider Transactions Over The Last Year
The insider, April Boise, made the biggest insider sale in the last 12 months. That single transaction was for US$1.2m worth of shares at a price of US$139 each. That means that an insider was selling shares at slightly below the current price (US$162). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 43% of April Boise's stake.
All up, insiders sold more shares in Eaton than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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Insiders At Eaton Have Sold Stock Recently
The last three months saw significant insider selling at Eaton. In total, insiders sold US$1.3m 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
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Eaton insiders own 0.4% of the company, currently worth about US$229m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Eaton Insiders?
Insiders haven't bought Eaton stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, Eaton makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Eaton. For example - Eaton has 2 warning signs we think you should be aware of.
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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, but not derivative transactions.
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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.
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