Selling US$4.0m Of Energy Services of America Stock Rewarded Insiders

While Energy Services of America Corporation (NASDAQ:ESOA) shareholders have had a good week with the stock up 21%, they shouldn't let their guards down. In spite of the relatively cheap prices, insiders made the decision to sell US$4.0m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Energy Services of America

Energy Services of America Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Chairman of the Board, Marshall Reynolds, for US$713k worth of shares, at about US$9.50 per share. That means that even when the share price was below the current price of US$18.80, an insider wanted to cash in some shares. 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 4.5% of Marshall Reynolds's holding.

Happily, we note that in the last year insiders paid US$366k for 46.50k shares. On the other hand they divested 445.73k shares, for US$4.0m. In total, Energy Services of America insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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Insiders At Energy Services of America Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Energy Services of America. Specifically, insiders ditched US$1.0m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Does Energy Services of America Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Energy Services of America insiders own about US$82m worth of shares. That equates to 31% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Energy Services of America Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, Energy Services of America makes money, and is growing profits. Insiders own shares, but we're still pretty cautious, given the history of sales. 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. Case in point: We've spotted 3 warning signs for Energy Services of America you should be aware of, and 1 of these is significant.

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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.