Why Did Del Frisco’s Restaurant Group Inc’s’ (NASDAQ:DFRG) Insiders Buy Up More Shares?

Del Frisco’s Restaurant Group, Inc. develops, owns, and operates restaurants in the United States. Del Frisco’s Restaurant Group’s insiders have invested 33.33k shares in the small-cap stocks within the past three months. Generally, insiders buying more shares in their own firm sends a bullish signal. A two-decade research published in The MIT Press (1998) showed that stocks following insider buying outperformed the market by 4.5%. But these signals may not be sufficient to gain confidence on whether to invest. I’ve assessed two potential reasons behind the insiders’ latest motivation to buy more shares. View out our latest analysis for Del Frisco’s Restaurant Group

Who Are The Insiders?

NasdaqGS:DFRG Insider_trading June 19th 18
NasdaqGS:DFRG Insider_trading June 19th 18
Over the past three months, more shares have been bought than sold by Del Frisco’s Restaurant Group’s’ insiders. In total, individual insiders own less than one million shares in the business, or around 1.98% of total shares outstanding. Latest buying activities involved the following insiders:
Name Management Board Total Annual Compensation
David Barr US$0147.50k
Ian Carter US$02.50m
Juan Salas US$0799.13k
Neil Thomson
Norman Abdallah US$0137.50k

Is This Consistent With Future Growth?

NasdaqGS:DFRG Future Profit June 19th 18
NasdaqGS:DFRG Future Profit June 19th 18
On the surface, Del Frisco’s Restaurant Group’s future looks mediocre. Digging deeper into the line items, Del Frisco’s Restaurant Group is believed to experience a limited level of revenue growth next year, true Improved cost management and revenue growth initiatives could lead to higher earnings growth in the future. Recognising this potential could be a motivation for the insiders’ decision to buy now.

Did Insiders Buy On Share Price Volatility?

An alternative reason for recent trades could be insiders taking advantage of the share price volatility. Volatility provides an opportunity to trade on market inefficiencies when the stock is under-priced compared to the stock’s intrinsic value. Del Frisco’s Restaurant Group’s shares ranged between $16.95 and $12.65 over the past three months. This suggests moderate volatility with a share price movement of 33.99%. This may not be large enough to warrant any significant purchases, therefore the underlying driver may be the insiders’ belief of company growth prospects or simply their personal portfolio rebalancing.

Next Steps:

Del Frisco’s Restaurant Group’s net buying tells us the stock is in favour with some insiders, coherent with the sizeable growth in expected earnings, on top of a reasonable share price movement around the same time. Although insider buying can be a useful prompt, following the lead of an insider, however, will never replace diligent research. I’ve put together two important aspects you should further examine:

  1. Financial Health: Does Del Frisco’s Restaurant Group have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of Del Frisco’s Restaurant Group? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.