Yahoo Finance Are Autosports Group Limited (ASX:ASG) Insiders Bullish About The Stock
Autosports Group Limited operates in the retail automotive industry in Australia. Autosports Group’s insiders have invested more than 7.17 million shares in the small-cap stocks within the past three months. It is widely considered that insider buying stock in their own companies is potentially a bullish signal. A two-decade research published in The MIT Press (1998) showed that stocks following insider buying outperformed the market by 4.5%. But these signals may not be sufficient to gain confidence on whether to invest. I will be analysing whether these buying activities are supported by favourable future outlook and recent share price volatility.
See our latest analysis for Autosports Group
Who Are The Insiders?
There were more Autosports Group insiders that have bought shares than those that have sold. In total, individual insiders own over 42.35 million shares in the business, which makes up around 21.07% of total shares outstanding.
Insiders that have recently bought more shares are: Marina Go (board member) and James Pagent (management and board member) This statement is created if only one individual insider bought company shares in past 3 months . Entities that bought on the open market in the last three months were AustralianSuper Pty Ltd , Colonial First State Asset Management (Australia) Limited and Nicholas Pagent Family Trust. Although these are institutional investors, rather than company executives or board members, the insights these investors gain from direct access to management as large investors would make them better-informed than the average retail investor. In this specific instance, I would classify these investors as company insiders.
Does Buying Activity Reflect Future Growth?
On the surface, analysts’ earnings growth projection of 37.7% over the next three years provides a buoyant outlook going forward which is consistent with the signal company insiders are sending with their net buying activity.
Digging deeper into the line items, Autosports Group is believed to experience a strong double-digit revenue growth next year, which does not seem to flow into earnings given negative growth expectations of -2.8%. This means cost growth is anticipated to outstrip revenues, indicating a period of investment and growth in the company.
Insiders’ net buying activities seem to support the idea of growth moving forward. Or they may simply view the current share price as too low relative to its intrinsic value.
Did Stock Price Volatility Instigate Buying?
Alternatively, the timing of these insider transactions may have been driven by share price volatility. This means, if insiders believe shares were heavily undervalued recently, this would provide a prime opportunity to buy more irrespective of its growth outlook.
Within the past three months, Autosports Group’s share price traded at a high of A$1.75 and a low of A$1.41. This indicates reasonable volatility with a change of 24.11%.
This movement could potentially be significant enough to warrant insiders to accrue their shares.
Next Steps:
Autosports Group’s net buying tells us the stock is in favour with some insiders, although the expected earnings growth challenges this conclusion, and the share price movement may be too trivial to cash in on any mispricing. Although insider buying can be a useful prompt, following the lead of an insider, however, will never replace diligent research. there are two essential aspects you should look at:
Financial Health: Does Autosports Group have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of Autosports Group? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
