Insiders Could Have Profited By Holding onto Jack in the Box Shares Despite 13% Drop

Jack in the Box Inc.'s (NASDAQ:JACK) stock price has dropped 13% in the previous week, but insiders who sold US$1.4m in stock over the past year have had less luck. Insiders might have been better off holding onto their shares, given that the average selling price of US$42.23 is still below the current share price.

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.

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The Last 12 Months Of Insider Transactions At Jack in the Box

In the last twelve months, the biggest single sale by an insider was when the insider, Darin Harris, sold US$594k worth of shares at a price of US$40.52 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (US$17.34). So it may not shed much light on insider confidence at current levels.

Insiders in Jack in the Box didn't buy any shares in 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!

See our latest analysis for Jack in the Box

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Jack in the Box Insiders Are Selling The Stock

We have seen a bit of insider selling at Jack in the Box, over the last three months. Senior VP & Chief Supply Chain Officer Carl Mount divested only US$12k worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the amount sold isn't enough for us to put any weight on it.

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. From looking at our data, insiders own US$2.0m worth of Jack in the Box stock, about 0.6% of the company. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. I generally like to see higher levels of ownership.

So What Does This Data Suggest About Jack in the Box Insiders?

We did not see any insider buying in the last three months, but we did see selling. But given the selling was modest, we're not worried. We're a little cautious about the insider selling at Jack in the Box. And we're not picking up on high enough insider ownership to give us any comfort. 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. Every company has risks, and we've spotted 1 warning sign for Jack in the Box you should know about.

But note: Jack in the Box may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.