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The Timken Company (NYSE:TKR) insiders sold US$1.7m worth of stock suggesting impending weakness.
In the last year, many The Timken Company (NYSE:TKR) insiders sold a substantial stake in the company which may have sparked shareholders' attention. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
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.
Check out our latest analysis for Timken
Timken Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Executive VP & President of Industrial Motion, Christopher Coughlin, for US$1.0m worth of shares, at about US$69.29 per share. That means that even when the share price was below the current price of US$83.09, an insider wanted to cash in some shares. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 13% of Christopher Coughlin's holding.
In the last year Timken 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!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Timken Insiders Are Selling The Stock
The last three months saw significant insider selling at Timken. In total, Independent Director Jacqueline Woods sold US$134k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Timken insiders own about US$268m worth of shares (which is 4.4% of the company). 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 Does This Data Suggest About Timken Insiders?
An insider hasn't bought Timken stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn't show any insider buying. But since Timken is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. To that end, you should learn about the 2 warning signs we've spotted with Timken (including 1 which can't be ignored).
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.
What are the risks and opportunities for Timken?
The Timken Company designs, manufactures, and manages engineered bearings and industrial motion products worldwide.
Rewards
Trading at 22.2% below our estimate of its fair value
Earnings are forecast to grow 9.05% per year
Earnings have grown 8.8% per year over the past 5 years
Risks
Significant insider selling over the past 3 months
Has a high level of debt
Further research on
Timken
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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.
About NYSE:TKR
Timken
The Timken Company designs, manufactures, and manages engineered bearings and industrial motion products worldwide.
Very undervalued with proven track record and pays a dividend.
