Stock Analysis

How Much Are McKesson Corporation (NYSE:MCK) Insiders Taking Off The Table?

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NYSE:MCK
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It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell McKesson Corporation (NYSE:MCK), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

See our latest analysis for McKesson

McKesson Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Independent Director, N. Coles, for US$385k worth of shares, at about US$157 per share. That means that an insider was selling shares at slightly below the current price (US$182). 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. 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 100% of N. Coles's holding.

Insiders in McKesson 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. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
NYSE:MCK Insider Trading Volume February 16th 2021

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insiders at McKesson Have Sold Stock Recently

The last three months saw significant insider selling at McKesson. In total, Executive VP & Chief Human Resources Officer Tracy Faber dumped US$95k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Does McKesson Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company 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. Insiders own 0.04% of McKesson shares, worth about US$12m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The McKesson Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. While insiders do own shares, they don't own a heap, and they have been selling. We're in no rush to buy! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing McKesson. Every company has risks, and we've spotted 2 warning signs for McKesson (of which 1 doesn't sit too well with us!) you should know about.

Of course McKesson 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, but not derivative transactions.

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What are the risks and opportunities for McKesson?

McKesson Corporation provides healthcare services in the United States and internationally.

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Rewards

  • Trading at 25.5% below our estimate of its fair value

  • Earnings are forecast to grow 6.5% per year

  • Became profitable this year

Risks

  • Has a high level of debt

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