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Read This Before Buying Snap-on Incorporated (NYSE:SNA) Shares

Simply Wall St

We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Snap-on Incorporated (NYSE:SNA).

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’

See our latest analysis for Snap-on

Snap-on Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by Thomas Kassouf for US$5.3m worth of shares, at about US$162 per share. That means that an insider was selling shares at around the current price of US$161. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.

In the last twelve months insiders netted US$6.7m for 41.57k shares sold. Over the last year we saw more insider selling of Snap-on shares, than buying. The sellers received a price of around US$162, on average. It’s not particularly great to see insiders were selling shares around current prices. Since insiders sell for many reasons, we wouldn’t put too much weight on it. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

NYSE:SNA Recent Insider Trading, March 6th 2019

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders at Snap-on Have Sold Stock Recently

The last three months saw significant insider selling at Snap-on. In total, insiders sold US$6.0m 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 directors think that the shares are a bargain.

Insider Ownership of Snap-on

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Snap-on insiders own about US$103m worth of shares (which is 1.2% 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 Snap-on Tell Us?

Insiders haven’t bought Snap-on stock in the last three months, but there was some selling. And there weren’t any purchases to give us comfort, over the last year. But since Snap-on is profitable and growing, we’re not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. Of course, the future is what matters most. So if you are interested in Snap-on, you should check out this free report on analyst forecasts for the company.

But note: Snap-on may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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 editorial-team@simplywallst.com. 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.