As Skanska AB (publ)'s market cap (STO:SKA B) drops to kr90b, insiders might be questioning their decision to buy earlier this year

By
Simply Wall St
Published
November 24, 2021
OM:SKA B
Source: Shutterstock

The recent price decline of 3.7% in Skanska AB (publ)'s (STO:SKA B) stock may have disappointed insiders who bought kr6.5m worth of shares at an average price of kr224 in the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth kr6.3m, which is not what they expected.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Skanska

Skanska Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Independent Director Jan Gurander for kr1.0m worth of shares, at about kr209 per share. That implies that an insider found the current price of kr217 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for Skanska share holders is that insiders were buying at near the current price.

While Skanska insiders bought shares during the last year, they didn't sell. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
OM:SKA B Insider Trading Volume November 24th 2021

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insiders at Skanska Have Bought Stock Recently

Over the last quarter, Skanska insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought kr1.1m worth of shares. This makes one think the business has some good points.

Does Skanska Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Skanska insiders own 0.4% of the company, worth about kr346m. 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 Does This Data Suggest About Skanska Insiders?

It's certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Skanska. That's what I like to see! While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. To help with this, we've discovered 2 warning signs (1 makes us a bit uncomfortable!) that you ought to be aware of before buying any shares in Skanska.

But note: Skanska 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.

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.

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