Yahoo Finance Are Insiders Pessimistic About Spirit AeroSystems Holdings Inc (NYSE:SPR) Stock?
Spirit AeroSystems Holdings, Inc., through its subsidiaries, designs, manufactures, and supplies commercial aero structures worldwide. Spirit AeroSystems Holdings’s insiders have divested from 39.78k shares in the large-cap stock within the past three months. Generally, insiders selling shares in their own firm sends a bearish signal. The MIT Press (1998) published an article showing that stocks following insider selling underperformed the market by 2.7%. However, it may not be sufficient to base your investment decision merely on these signals. I’ve assessed two potential reasons behind the insiders’ latest motivation to sell their shares.
See our latest analysis for Spirit AeroSystems Holdings
Which Insiders Are Selling?
There were more Spirit AeroSystems Holdings insiders that have sold shares than those that have bought. In total, individual insiders own less than one million shares in the business, or around 0.81% of total shares outstanding. Latest selling activities involved the following insiders: Charles Chadwell (management) , Duane Hawkins (board member) , Krisstie Kondrotis (management) , Michelle Lohmeier (management) and Richard Gephardt (board member) .
Does Selling Activity Reflect Future Growth?
On the surface, analysts’ earnings growth projection of 78.4% over the next three years provides a great outlook going forward. But this is not consistent with the signal company insiders are sending with their net selling activity. Probing further into annual growth rates, Spirit AeroSystems Holdings is expected to experience a restrained level of top-line growth over the next year, but a suggestively greater level of expected earnings growth. Usually this discrepancy can be explained by an equally significant drop in costs. This may not be seen as a maintainable practice by insiders, who may expect a deterioration in earnings to reflect lower revenues growth in the future. Or they may merely view the stock as overvalued by the market which provides a suitable time to sell.
Did Insiders Sell On Share Price Volatility?
An alternative reason for recent trades could be insiders taking advantage of the share price volatility. Volatility provides an opportunity to trade on market inefficiencies when the stock is under-priced compared to the stock’s intrinsic value. In the past three months, Spirit AeroSystems Holdings’s share price reached a high of $93.25 and a low of $84.07. This indicates a relatively insignificant share price movement, with a small change of 10.92%. Potentially, insider transactions are not share price related but may be due to their belief on what will happen to the company in the future or simply just personal cash and diversification needs.
Next Steps:
Spirit AeroSystems Holdings’s net selling activity tells us the stock has fallen out of favour with some insiders as of late, however, this is rather cautious relative to analysts’ earnings expectation, and the share price movement may be too trivial to cash in on any mispricing. However it’s crucial to note that insider divesting may have nothing to do with their views on the company’s future performance. Moreover, while insider selling can be a useful prompt, following the lead of an insider, however, will never replace diligent research. I’ve put together two key factors you should further research:
Financial Health: Does Spirit AeroSystems Holdings 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 Spirit AeroSystems Holdings? 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.
