Read This Before Buying Sprouts Farmers Market, Inc. (NASDAQ:SFM) Shares

It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Sprouts Farmers Market, Inc. (NASDAQ:SFM), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

See our latest analysis for Sprouts Farmers Market

The Last 12 Months Of Insider Transactions At Sprouts Farmers Market

The Chief Operations Officer, Dan Sanders, made the biggest insider sale in the last 12 months. That single transaction was for US$735k worth of shares at a price of US$24.06 each. So we know that an insider sold shares at around the present share price of US$22.59. While we don't usually like to see insider selling, it's more concerning if the sales take place 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).

Over the last year, we can see that insiders have bought 25.75k shares worth US$480k. But insiders sold 76.41k shares worth US$1.7m. All up, insiders sold more shares in Sprouts Farmers Market than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like Sprouts Farmers Market better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Does Sprouts Farmers Market Boast High 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. From our data, it seems that Sprouts Farmers Market insiders own 0.3% of the company, worth about US$8.5m. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Do The Sprouts Farmers Market Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. Our analysis of Sprouts Farmers Market insider transactions leaves us unenthusiastic. And we're not picking up on high enough insider ownership to give us any comfort. 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. At Simply Wall St, we found 1 warning sign for Sprouts Farmers Market that deserve your attention before buying any shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.

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This article by Simply Wall St is general in nature. 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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