Yahoo Finance Why Did TalkTalk Telecom Group PLC’s’ (LON:TALK) Insiders Buy Up More Shares?
TalkTalk Telecom Group PLC provides fixed line, TV, and mobile telecommunications services. TalkTalk Telecom Group is one of United Kingdom’s some insider buying over the past three months, with insiders investing in 46,000 shares during this period. It is widely considered that insider buying stock in their own companies is potentially a bullish signal. A research published in The MIT Press (1998) concluded that stocks following insider buying outperformed the market by 4.5%. However, these signals may not be enough to gain conviction on whether to invest. I will be analysing whether these buying activities are supported by favourable future outlook and recent share price volatility.
Check out our latest analysis for TalkTalk Telecom Group
Which Insiders Are Buying?
There were more TalkTalk Telecom Group insiders that have bought shares than those that have sold. In total, individual insiders own over 454 million shares in the business, which makes up around 39.8% of total shares outstanding. The insider that recently bought more shares is Howard Stringer (board member) .
Is This Consistent With Future Growth?
On the surface, analysts’ revenue growth projection of 2.01% over the next three years provides a restrained outlook moving forward, however, insiders may be more optimistic than the market, with their net buying activity. Digging deeper into the line items,analysts anticipate negative growth in its top-line over the next year, which indicates the company may be facing some headwinds. Insiders may have confidence in these cost initiatives, or believe the market has overly penalized the company’s shares, leading to an opportune time to buy.
Did Stock Price Volatility Instigate Buying?
Another factor we should consider is whether the timing of these insider transactions coincide with any significant share price movements. Volatility provides an opportunity to trade on market inefficiencies when the stock is under-priced compared to the stock’s intrinsic value. Within the past three months, TalkTalk Telecom Group’s share price traded at a high of £1.35 and a low of £1. This suggests a fairly large volatility with a share price movement of 35.41%. Insiders may deem this relatively meaningful movement as an opportunity to increase their shareholdings.
Next Steps:
TalkTalk Telecom Group’s net buying tells us the stock is in favour with some insiders, which is fairly consistent with earnings growth expectations, on top of a reasonable share price movement around the same time. However, while insider transactions could be a helpful signal, it is definitely not sufficient on its own to make an investment decision. I’ve put together two fundamental factors you should look at:
Financial Health: Does TalkTalk Telecom 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 TalkTalk Telecom 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 pass 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.
