It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Flexsteel Industries, Inc. (NASDAQ:FLXS).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
The Last 12 Months Of Insider Transactions At Flexsteel Industries
In the last twelve months, the biggest single purchase by an insider was when CFO, COO Derek Schmidt bought US$987k worth of shares at a price of US$16.80 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$37.40. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
Happily, we note that in the last year insiders paid US$2.2m for 110.52k shares. But they sold 1.49k shares for US$55k. In the last twelve months there was more buying than selling by Flexsteel Industries insiders. They paid about US$20.21 on average. To my mind it is good that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. 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!NasdaqGS:FLXS Insider Trading Volume July 15th 2021
Flexsteel Industries is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Flexsteel Industries Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Flexsteel Industries insiders own 7.2% of the company, worth about US$19m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Flexsteel Industries Insiders?
There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Flexsteel Industries and their transactions don't cause us concern. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. To help with this, we've discovered 3 warning signs (1 can't be ignored!) that you ought to be aware of before buying any shares in Flexsteel Industries.
Of course Flexsteel Industries may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
In This StoryFLXS
Latest Nasdaq-Listed Companies Videos
- Is It Time To Consider Buying QUALCOMM Incorporated (NASDAQ:QCOM)?
- With A 4.0% Return On Equity, Is Greenidge Generation Holdings Inc. (NASDAQ:GREE) A Quality Stock?
- We Think Confluent (NASDAQ:CFLT) Can Easily Afford To Drive Business Growth
- This Insider Has Just Sold Shares In Pacific Biosciences of California, Inc. (NASDAQ:PACB)