Owens & Minor, Inc., together with its subsidiaries, operates as a healthcare services company in the United States, the United Kingdom, Ireland, France, Germany, and other European countries. Owens & Minor’s insiders have divested from 54.42k shares in the large-cap stock within the past three months. A well-known argument is that insiders divesting from their own companies’ shares sends a pessimistic signal. A two-decade research published in The MIT Press (1998) showed that stocks following insider selling declined 2.7% relative to the market. However, these signals may not be enough to gain conviction on whether to divest. I’ve assessed two potential reasons behind the insiders’ latest motivation to sell their shares.
Who Are The Insiders?
There were more Owens & Minor insiders that have sold shares than those that have bought. In total, individual insiders own over 1.44 million shares in the business, which makes up around 2.31% of total shares outstanding.Insiders that have recently sold some of their shares are:
|Name||Management||Board||Total Annual Compensation|
Is Future Growth Outlook As Bearish?
From the outside, Owens & Minor’s future looks muffled. Digging deeper into the line items, analysts anticipate a rather subdued top-line growth over the next year, although a significantly greater rate of earnings growth. Usually this discrepancy can be explained by an equally significant drop in costs. This may not be seen as a maintainable practice by insiders, who may expect a deterioration in earnings to reflect lower revenues growth in the future. Or they may merely view the stock as overvalued by the market which provides a suitable time to sell.
Did Stock Price Volatility Instigate Selling?
An alternative reason for recent trades could be insiders taking advantage of the share price volatility. A correlation could mean directors are trading on market inefficiencies based on their belief of the company’s intrinsic value. Owens & Minor’s shares ranged between $18.87 and $14.11 over the past three months. This indicates moderate volatility with a share price movement of 33.73%. This may not be large enough to warrant any significant divesting, therefore the underlying driver may be the insiders’ belief of company growth prospects or simply their personal portfolio diversification needs.
Owens & Minor’s net selling activity tells us the stock has fallen out of favour with some insiders as of late, although the positive expected earnings growth challenges this assumption, whereas a highly volatile share price could be the driver to sell. However it’s crucial to note that insider divesting may have nothing to do with their views on the company’s future performance. Furthermore, while insider transactions could be a helpful signal, it is definitely not sufficient on its own to make an investment decision. there are two relevant aspects you should further research:
- Financial Health: Does Owens & Minor have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of Owens & Minor? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.