Did Insiders Buy On Bombardier Inc's (TSE:BBD.B) Price Volatility?

Bombardier Inc., together with its subsidiaries, manufactures and sells transportation equipment worldwide. Bombardier's insiders have invested 100,000 shares in the large-cap stocks within the past three months. It is widely considered that insider buying stock in their own companies is potentially a bullish signal. The MIT Press (1998) published an article showing 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. Today we will evaluate whether these decisions are bolstered by analysts’ expectations of future growth as well as recent share price movements.

View our latest analysis for Bombardier

Who Are The Insiders?

More shares have been bought than sold by Bombardier insiders in the past three months. In total, individual insiders own over 272 million shares in the business, which makes up around 11.51% of total shares outstanding. The following insiders have recently increased their company holdings:

Name	Management	Board	Total Annual Compensation
Douglas Oberhelman

Is This Consistent With Future Growth?

Analysts’ expectations for revenue growth over the next 3 years of 41.78% provides a decent outlook for the company which is consistent with the signal company insiders are sending with their net buying activity. Probing further into annual growth rates,Bombardier is expected to experience a rather subdued top-line growth over the next year, Insiders confident in the company's potential to deliver continued growth could provide incentives to buy now.

Can Share Price Volatility Explain The Buy?

Alternatively, the timing of these insider transactions may have been driven by share price volatility. A correlation could mean directors are trading on market inefficiencies based on their belief of the company’s intrinsic value. Within the past three months, Bombardier’s share price traded at a high of CA$4.09 and a low of CA$2.83. This suggests reasonably high share price volatility with a change of 44.52%. This movement is potentially meaningful enough to trade on if insiders believe the market has mispriced their companies’ shares.

Next Steps:

Bombardier’s insider meaningful buying activity tells us the shares are currently in favour, which is fairly consistent with earnings growth expectations, as well as the relatively large share price volatility over the same period of trade. However, while insider transactions could be a helpful signal, it is definitely not sufficient on its own to make an investment decision. I've compiled two relevant factors you should further research:

1. Financial Health: Does Bombardier 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.
2. Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of Bombardier? 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.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.