Possible Bearish Signals With Domino's Pizza Insiders Disposing Stock

The fact that multiple Domino's Pizza, Inc. (NASDAQ:DPZ) 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, 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 would consider it foolish to ignore insider transactions altogether.

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Domino's Pizza Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Independent Director, Andrew Balson, for US$3.0m worth of shares, at about US$429 per share. That means that an insider was selling shares at slightly below the current price (US$463). 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 14% of Andrew Balson's holding.

Insiders in Domino's Pizza didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for Domino's Pizza

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Domino's Pizza Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Domino's Pizza. Specifically, insiders ditched US$386k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership Of Domino's Pizza

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Domino's Pizza insiders own about US$64m worth of shares. That equates to 0.4% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Domino's Pizza Tell Us?

Insiders haven't bought Domino's Pizza stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. But it is good to see that Domino's Pizza is growing earnings. While insiders do own shares, they don't own a heap, and they have been selling. We'd practice some caution before buying! 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. You'd be interested to know, that we found 2 warning signs for Domino's Pizza and we suggest you have a look.

Of course Domino's Pizza may not be the best stock to buy. So you may wish to see this free collection of high quality 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 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.