Stock Analysis

Insiders sold US$1.2m worth of Lear Corporation (NYSE:LEA) stock last year, could be a warning sign to watch out for

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NYSE:LEA
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While Lear Corporation (NYSE:LEA) shareholders have enjoyed a good week with stock up 3.0%, they need remain vigilant. Although prices were relatively low, insiders chose to sell US$1.2m worth of stock in the past 12 months. This could be a sign of impending weakness.

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.

However if you'd rather see where the opportunities and risks are within LEA's industry, you can check out our analysis on the US Auto Components industry.

Lear Insider Transactions Over The Last Year

The President, Raymond Scott, made the biggest insider sale in the last 12 months. That single transaction was for US$526k worth of shares at a price of US$131 each. That means that an insider was selling shares at slightly below the current price (US$141). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 6.2% of Raymond Scott's holding.

In the last year Lear insiders didn't buy any company stock. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
NYSE:LEA Insider Trading Volume September 11th 2022

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Does Lear Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 0.3% of Lear shares, worth about US$25m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Lear Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. Our analysis of Lear insider transactions leaves us cautious. But we do like the fact that insiders own a fair chunk of the company. 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. Every company has risks, and we've spotted 3 warning signs for Lear (of which 1 is potentially serious!) 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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About NYSE:LEA

Lear

Lear Corporation designs, develops, engineers, manufactures, assembles, and supplies automotive seating, and electrical distribution systems and related components for automotive original equipment manufacturers in North America, Europe, Africa, Asia, and South America.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation2
Future Growth4
Past Performance0
Financial Health5
Dividends3

Read more about these checks in the individual report sections or in our analysis model.

Excellent balance sheet with reasonable growth potential.