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 before you buy or sell Texas Roadhouse, Inc. (NASDAQ:TXRH), you may well want to know whether insiders have been buying or selling.
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, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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 Texas Roadhouse
In the last twelve months, the biggest single sale by an insider was when the Lead Independent Director, Gregory Moore, sold US$1.3m worth of shares at a price of US$55.53 per share. So we know that an insider sold shares at around the present share price of US$50.11. While we don’t usually like to see insider selling, it’s more concerning if the sales take place at a lower price. We note that this sale took place at around the current price, so it isn’t a major concern, though it’s hardly a good sign. Gregory Moore was the only individual insider to sell over the last year.
The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like Texas Roadhouse better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Texas Roadhouse Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Texas Roadhouse insiders own 6.2% of the company, worth about US$214m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Texas Roadhouse Tell Us?
It doesn’t really mean much that no insider has traded Texas Roadhouse shares in the last quarter. It’s great to see high levels of insider ownership, but looking back over the last year, we don’t gain confidence from the Texas Roadhouse insiders selling. Of course, the future is what matters most. So if you are interested in Texas Roadhouse, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity 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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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.
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