Market participants closely follow insider activity, as the transactions can reflect current sentiment surrounding the future state of business. Of course, investors typically get a confidence boost upon seeing an insider swoop in for a buy.
Insiders are defined as those in the possession of non-public information, commonly executive officers or the board of directors. To little surprise, many strict rules apply to insiders. And they typically have a holding horizon longer than most, a critical aspect to be aware of.
As of late, the CEOs of several companies, including Workday WDAY, Energy Transfer ET, and Insulet PODD, have acquired shares. What did they see? Let’s take a closer look.
Workday
Workday provides enterprise-level software solutions for financial management and human resource domains. Co-CEO Carl Eschenbach purchased roughly 8,700 WDAY shares in late August, with the transaction totaling just under $2.1 million.
The company’s latest quarterly results came in better than expected, registering a 15% EPS surprise and a modest revenue beat. In fact, Workday has exceeded the Zacks Consensus EPS Estimate by an average of 15% across its last four releases.
Workday was firing on all cylinders throughout its latest quarter; operating income totaled $36.3 million, up nicely from a loss of -$34.1 million in the comparable period last year. Further, cash flow from operations reached $425 million, well above the $114 million in the year-ago period.
Interestingly enough, WDAY shares have seen bullish activity post-earnings regularly over the last year.
Workday is forecasted to see decent growth, with Zacks Consensus Estimates suggesting nearly 50% higher earnings on 16% higher sales in its current year. And in FY25, expectations allude to an additional 18% earnings growth paired with a 17% sales bump.
Energy Transfer
Energy Transfer owns and operates diversified portfolios of energy assets primarily in the United States. CEO Marshall McCrea III purchased 50,000 ET shares at a total price tag of $682 thousand at the beginning of September.
Income-focused investors could find ET shares attractive, currently yielding a sizable 9.2% annually, well above the Zacks Oils and Energy sector average.
The 200-day simple moving average looks to be a solid place to add ET shares on weakness, as shares have consistently respected the level in past instances.
There were several highlights from its latest earnings release, including the acquisition of Lotus Midstream Operations, expected to expand Energy Transfer’s crude pipeline footprint across the Permian Basin.
Insulet
Insulet Corporation is a leading developer, manufacturer, and marketer of the Omnipod Insulin Management System. CEO James Hollingshead purchased 5,550 PODD shares, with the total transaction totaling just over $1 million.
The company has enjoyed positive earnings estimate revisions across the board, reflecting optimism among analysts.
Insulet’s growth has been hard to ignore, with 2023 Q2 revenues of $397 million improving 32% from the year-ago period. Impressively, the company has posted double-digit percentage year-over-year revenue growth rates in ten consecutive quarters.
And the growth is slated to continue, with Zacks Consensus Estimates suggesting a sizable earnings jump in its current year on nearly 25% higher revenues.
Insulet raised its FY23 revenue guidance following its latest better-than-expected results, now expecting sales to grow in a bracket of 22% – 25%, nicely above the previous 18% – 22% expected.
Bottom Line
It’s easy to understand why investors closely follow insider activity, as it can provide a snapshot of current sentiment surrounding a company’s future. An insider buy is undoubtedly a positive, whereas a sell could carry negative undertones in certain situations.
And for those seeking stocks insiders are diving into, all three above – Workday WDAY, Energy Transfer ET, and Insulet PODD – have all seen their CEOs step in.
Energy Transfer LP (ET): Free Stock Analysis Report
Workday, Inc. (WDAY): Free Stock Analysis Report
Insulet Corporation (PODD): Free Stock Analysis Report
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