Public Companies

Don't Ignore The Fact That This Insider Just Sold Some Shares In The AZEK Company Inc. (NYSE:AZEK)

Some The AZEK Company Inc. (NYSE:AZEK) shareholders may be a little concerned to see that the CEO, President & Director, Jesse Singh, recently sold a substantial US$2.1m worth of stock at a price of US$41.94 per share. However, that sale only accounted for 2.2% of their holding, so arguably it doesn't say much about their conviction.

The Last 12 Months Of Insider Transactions At AZEK

In fact, the recent sale by CEO, President & Director Jesse Singh was not their only sale of AZEK shares this year. Earlier in the year, they fetched US$33.25 per share in a -US$9.2m sale. That means that even when the share price was below the current price of US$41.90, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 10% of Jesse Singh's stake.

Insiders in AZEK didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volumeNYSE:AZEK Insider Trading Volume June 12th 2021

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).

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that AZEK insiders own 3.3% of the company, worth about US$212m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About AZEK Insiders?

An insider sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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