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Should You Be Worried About Insider Transactions At Eversource Energy (NYSE:ES)?

Simply Wall St

It is not uncommon to see companies perform well in the years after insiders buy shares. 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 we'll take a look at whether insiders have been buying or selling shares in Eversource Energy (NYSE:ES).

Do Insider Transactions Matter?

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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.

View our latest analysis for Eversource Energy

Eversource Energy Insider Transactions Over The Last Year

The Chairman, James Judge, made the biggest insider sale in the last 12 months. That single transaction was for US$5.5m worth of shares at a price of US$69.50 each. That means that an insider was selling shares at slightly below the current price (US$79.29). 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 39% of James Judge's stake.

In the last twelve months insiders netted US$9.7m for 137447 shares sold. In the last year Eversource Energy insiders didn't buy any company stock. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

NYSE:ES Recent Insider Trading, November 12th 2019

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).

Insiders at Eversource Energy Have Sold Stock Recently

The last three months saw significant insider selling at Eversource Energy. In total, Executive VP & CFO Philip Lembo sold US$100k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 0.2% of Eversource Energy shares, worth about US$41m. 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 Eversource Energy Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. Of course, the future is what matters most. So if you are interested in Eversource Energy, you should check out this free report on analyst forecasts for the company.

But note: Eversource Energy 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.

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.

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.