Metro Inc. (TSE:MRU) insiders sold CA$8.8m worth of stock suggesting impending weakness.

By
Simply Wall St
Published
April 10, 2022
TSX:MRU
Source: Shutterstock

Over the past year, many Metro Inc. (TSE:MRU) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Metro

Metro Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the President, Eric La Fleche, for CA$7.8m worth of shares, at about CA$68.74 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of CA$72.80. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 30% of Eric La Fleche's stake.

Metro insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
TSX:MRU Insider Trading Volume April 10th 2022

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Metro Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Metro shares. Specifically, insiders ditched CA$8.2m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership of Metro

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Metro insiders own 0.2% of the company, worth about CA$42m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Metro Insiders?

Insiders sold Metro shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. On the plus side, Metro makes money, and is growing profits. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 1 warning sign for Metro you should know about.

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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