Domino's Pizza, Inc. (NYSE:DPZ) insiders sold US$6.4m worth of stock suggesting impending weakness.

The fact that multiple Domino's Pizza, Inc. (NYSE:DPZ) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Domino's Pizza

The Last 12 Months Of Insider Transactions At Domino's Pizza

The Independent Director, Diana Cantor, made the biggest insider sale in the last 12 months. That single transaction was for US$2.6m worth of shares at a price of US$436 each. That means that even when the share price was below the current price of US$524, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 43% of Diana Cantor's holding.

Insiders in Domino's Pizza didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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Does Domino's Pizza Boast High 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. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Domino's Pizza insiders own 0.7% of the company, worth about US$127m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Domino's Pizza Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Domino's Pizza shares in the last quarter. While we feel good about high insider ownership of Domino's Pizza, we can't say the same about the selling of shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Domino's Pizza. While conducting our analysis, we found that Domino's Pizza has 2 warning signs and it would be unwise to ignore them.

But note: Domino's Pizza 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, but not derivative transactions.

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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.