UniFirst Insiders Sell US$8.1m Of Stock, Possibly Signalling Caution

Many UniFirst Corporation (NYSE:UNF) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. 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 do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for UniFirst

UniFirst Insider Transactions Over The Last Year

Notably, that recent sale by insider Cecelia Levenstein was not the only time they sold UniFirst shares this year. They previously made an even bigger sale of -US$4.0m worth of shares at a price of US$159 per share. That means that an insider was selling shares at slightly below the current price (US$171). 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. 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. It is worth noting that this sale was only 25% of Cecelia Levenstein's holding.

UniFirst insiders didn't buy any shares 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!

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UniFirst Insiders Are Selling The Stock

The last quarter saw substantial insider selling of UniFirst shares. In total, insiders dumped US$8.1m 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.

Does UniFirst Boast High 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. UniFirst insiders own about US$332m worth of shares (which is 10% 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 UniFirst Insiders?

Insiders sold UniFirst shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. But it is good to see that UniFirst is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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. While conducting our analysis, we found that UniFirst has 1 warning sign and it would be unwise to ignore it.

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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.

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