Insiders At Zurn Elkay Water Solutions Sold US$31m In Stock, Alluding To Potential Weakness

Many Zurn Elkay Water Solutions Corporation (NYSE:ZWS) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. 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, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Zurn Elkay Water Solutions

The Last 12 Months Of Insider Transactions At Zurn Elkay Water Solutions

Over the last year, we can see that the biggest insider sale was by the CEO & Chairman, Todd Adams, for US$13m worth of shares, at about US$33.06 per share. That means that even when the share price was below the current price of US$39.82, 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. It is worth noting that this sale was only 16% of Todd Adams's holding.

Insiders in Zurn Elkay Water Solutions didn't buy any shares in 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!

I will like Zurn Elkay Water Solutions 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.

Zurn Elkay Water Solutions Insiders Are Selling The Stock

The last three months saw significant insider selling at Zurn Elkay Water Solutions. In total, insiders sold US$12m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Zurn Elkay Water Solutions insiders own about US$162m worth of shares (which is 2.4% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Zurn Elkay Water Solutions Insiders?

Insiders haven't bought Zurn Elkay Water Solutions stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. But since Zurn Elkay Water Solutions is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Zurn Elkay Water Solutions. In terms of investment risks, we've identified 1 warning sign with Zurn Elkay Water Solutions and understanding this should be part of your investment process.

Of course Zurn Elkay Water Solutions may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.