Stock Analysis

Recticel SA/NV's (EBR:RECT) €49m market value fall may be overlooked by institutional investors after a year of 5.1% returns

ENXTBR:RECT
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Key Insights

  • Institutions' substantial holdings in Recticel implies that they have significant influence over the company's share price
  • 50% of the business is held by the top 18 shareholders
  • Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of Recticel SA/NV (EBR:RECT), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 52% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Losing money on investments is something no shareholder enjoys, least of all institutional investors who saw their holdings value drop by 6.9% last week. Still, the 5.1% one-year gains may have helped mitigate their overall losses. But they would probably be wary of future losses.

Let's take a closer look to see what the different types of shareholders can tell us about Recticel.

Check out our latest analysis for Recticel

ownership-breakdown
ENXTBR:RECT Ownership Breakdown August 5th 2024

What Does The Institutional Ownership Tell Us About Recticel?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Recticel already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Recticel, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
ENXTBR:RECT Earnings and Revenue Growth August 5th 2024

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Recticel is not owned by hedge funds. Baltisse N.V. is currently the largest shareholder, with 28% of shares outstanding. With 5.0% and 3.0% of the shares outstanding respectively, Janus Henderson Group plc and Degroof Petercam Asset Management are the second and third largest shareholders.

After doing some more digging, we found that the top 18 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Recticel

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own less than 1% of Recticel SA/NV. It has a market capitalization of just €665m, and the board has only €4.4m worth of shares in their own names. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

With a 47% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Recticel. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Recticel better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Recticel you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.