We’d be surprised if Eaton Corporation plc (NYSE:ETN) shareholders haven’t noticed that the Independent Director, Deborah McCoy, recently sold US$238k worth of stock at US$79.18 per share. On the bright side, that sale was only-9.1% of their holding, so we doubt it’s very meaningful, on its own.
The Last 12 Months Of Insider Transactions At Eaton
The Vice Chairman and Chief Financial & Planning Officer, Richard Fearon, made the biggest insider sale in the last 12 months. That single transaction was for US$2.5m worth of shares at a price of US$80.25 each. So what is clear is that an insider saw fit to sell at around the current price of US$79.17. While we don’t usually like to see insider selling, it’s more concerning if the sales take place at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
In the last twelve months insiders purchased 2285 shares for US$180k. But they sold 133k for US$11m. All up, insiders sold more shares in Eaton than they bought, over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
Insider Ownership of Eaton
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 appears that Eaton insiders own 0.3% of the company, worth about US$87m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Eaton Insider Transactions Indicate?
An insider sold stock recently, but they haven’t been buying. Zooming out, the longer term picture doesn’t give us much comfort. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. We’d think twice before buying! 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.
But note: Eaton may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.
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