Selling US$2.1m Of Stock Was Lucrative Decision For AZZ Insiders

While AZZ Inc. (NYSE:AZZ) shareholders have enjoyed a good week with stock up 12%, they need remain vigilant. The fact that insiders chose to dispose of US$2.1m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for AZZ

AZZ Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Chief Operating Officer of Metal Coatings Segment, Bryan Stovall, for US$1.2m worth of shares, at about US$84.79 per share. That means that even when the share price was below the current price of US$95.54, an insider wanted to cash in some shares. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 42% of Bryan Stovall's stake.

Happily, we note that in the last year insiders paid US$79k for 2.29k shares. But insiders sold 24.31k shares worth US$2.1m. In total, AZZ insiders sold more than they bought over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like AZZ better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 2.2% of AZZ shares, worth about US$63m. 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 Do The AZZ Insider Transactions Indicate?

It doesn't really mean much that no insider has traded AZZ shares in the last quarter. Still, the insider transactions at AZZ in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. 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. When we did our research, we found 3 warning signs for AZZ (1 is a bit unpleasant!) that we believe deserve your full attention.

But note: AZZ 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 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.