Possible Bearish Signals With Sprouts Farmers Market Insiders Disposing Stock

The fact that multiple Sprouts Farmers Market, Inc. (NASDAQ:SFM) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. 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, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Sprouts Farmers Market

The Last 12 Months Of Insider Transactions At Sprouts Farmers Market

Over the last year, we can see that the biggest insider sale was by the CEO & Director, Jack Sinclair, for US$4.5m worth of shares, at about US$149 per share. So we know that an insider sold shares at around the present share price of US$137. 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 Sprouts Farmers Market insiders didn't buy any company stock. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. 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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Sprouts Farmers Market Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Sprouts Farmers Market shares. In total, CEO & Director Jack Sinclair dumped US$782k 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

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Insiders own 0.3% of Sprouts Farmers Market shares, worth about US$42m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Sprouts Farmers Market Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. On the plus side, Sprouts Farmers Market makes money, and is growing profits. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Sprouts Farmers Market. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of Sprouts Farmers Market.

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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.