Zurn Elkay Water Solutions Insiders Sell US$13m Of Stock, Possibly Signalling Caution

The fact that multiple Zurn Elkay Water Solutions Corporation (NYSE:ZWS) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. 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, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

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

In the last twelve months, the biggest single sale by an insider was when the CEO & Chairman, Todd Adams, sold US$8.9m worth of shares at a price of US$39.83 per share. So what is clear is that an insider saw fit to sell at around the current price of US$37.01. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).

In the last year Zurn Elkay Water Solutions insiders didn't buy any company stock. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Zurn Elkay Water Solutions Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Zurn Elkay Water Solutions. In total, Senior VP & Chief Administrative Officer Mark Peterson dumped US$261k 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 Of Zurn Elkay Water Solutions

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Zurn Elkay Water Solutions insiders own about US$148m worth of shares (which is 2.4% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

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

An insider hasn't bought Zurn Elkay Water Solutions stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. But it is good to see that Zurn Elkay Water Solutions is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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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.