Have Eaton Insiders Been Selling Stock?

We wouldn't blame Eaton Corporation plc (NYSE:ETN) shareholders if they were a little worried about the fact that Gregory Page, the Lead Independent Director recently netted about US$1.3m selling shares at an average price of US$335. However, that sale only accounted for 7.2% of their holding, so arguably it doesn't say much about their conviction.

Check out our latest analysis for Eaton

The Last 12 Months Of Insider Transactions At Eaton

Notably, that recent sale by Gregory Page is the biggest insider sale of Eaton shares that we've seen in the last year. That means that even when the share price was slightly below the current price of US$337, an insider wanted to cash in some shares. 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. 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. This single sale was just 7.2% of Gregory Page's stake.

Over the last year, we can see that insiders have bought 2.71k shares worth US$812k. On the other hand they divested 20.67k shares, for US$6.2m. All up, insiders sold more shares in Eaton 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. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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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. I reckon it's a good sign if insiders own a significant number of shares in the company. Eaton insiders own 0.2% of the company, currently worth about US$306m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Eaton Insider Transactions Indicate?

The stark truth for Eaton is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But since Eaton is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Eaton. In terms of investment risks, we've identified 1 warning sign with Eaton and understanding it should be part of your investment process.

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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.