Yahoo Finance Should You Buy Pets at Home Group Plc (LON:PETS) When Insiders Do?
Pets at Home Group Plc, through its subsidiaries, operates as a specialist retailer of pet food, pet related products, and pet accessories in the United Kingdom. at Home Group’s insiders have invested 200.00k shares in the small-cap stocks within the past three months. Generally, insiders buying more shares in their own firm sends 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%. However, it may not be sufficient to base your investment decision merely on these signals. I’ve analysed two possible reasons driving the insiders’ decision to ramp up their investment of late.
View our latest analysis for at Home Group
Who Are Ramping Up Their Shares?
More shares have been bought than sold by at Home Group insiders in the past three months. In total, individual insiders own over 10.85 million shares in the business, which makes up around 2.17% of total shares outstanding.
The insider that recently bought more shares is Tony DeNunzio (board member) .
Does Buying Activity Reflect Future Growth?
Analysts’ expectations for earnings over the next 3 years of 17.7% provides a decent outlook for the company which is consistent with the signal company insiders are sending with their net buying activity.
Digging deeper into the line items, at Home Group is believed to experience a restrained level of top-line growth over the next year, which appears to fall through into the bottom line with a growth rate of9.8%. Improved cost management and revenue growth initiatives could lead to higher earnings growth in the future.
Recognising this potential could be a motivation for the insiders’ decision to buy now.
Did Insiders Buy On Share Price Volatility?
Another factor we should consider is whether the timing of these insider transactions coincide with any significant share price movements. 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, at Home Group’s share price traded at a high of £1.32 and a low of £1.13. This suggests moderate volatility with a share price movement of 16.45%.
This may not be large enough to warrant any significant purchases, therefore the underlying driver may be the insiders’ belief of company growth prospects or simply their personal portfolio rebalancing.
Next Steps:
at Home Group’s net buying tells us the stock is in favour with some insiders, which is fairly consistent with earnings growth expectations, though share price volatility was perhaps inconsequential to cash in on any mispricing. However, while insider transactions could be a helpful signal, it is definitely not sufficient on its own to make an investment decision. there are two key factors you should further examine:
Financial Health: Does at Home 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 at Home 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.
