Don't Ignore The Insider Selling In AZZ

Some AZZ Inc. (NYSE:AZZ) shareholders may be a little concerned to see that the President, Thomas Ferguson, recently sold a substantial US$2.3m worth of stock at a price of US$85.88 per share. That sale reduced their total holding by 11% which is hardly insignificant, but far from the worst we've seen.

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The Last 12 Months Of Insider Transactions At AZZ

Notably, that recent sale by Thomas Ferguson is the biggest insider sale of AZZ shares that we've seen in the last year. So it's clear an insider wanted to take some cash off the table, even below the current price of US$90.46. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower 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. It is worth noting that this sale was only 11% of Thomas Ferguson's holding.

In the last twelve months insiders purchased 2.29k shares for US$79k. On the other hand they divested 51.20k shares, for US$4.4m. Over the last year we saw more insider selling of AZZ shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

Check out our latest analysis for AZZ

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Does AZZ Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. AZZ insiders own about US$54m worth of shares. That equates to 2.0% of the company. 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 AZZ Insiders?

An insider hasn't bought AZZ stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn't give us much comfort. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. While it's good to be aware of 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 AZZ (of which 1 is a bit concerning!) you should know about.

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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 of direct interests only, but not derivative transactions or indirect interests.

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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.