Quite a few Summit Materials, Inc. (NYSE:SUM) insiders sold their shares over the past year, which may be a cause for concern. 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.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
Before we look at these insider transactions though, you might like to know that our analysis indicates that SUM is potentially undervalued!
The Last 12 Months Of Insider Transactions At Summit Materials
The Executive VP, Christopher Gaskill, made the biggest insider sale in the last 12 months. That single transaction was for US$224k worth of shares at a price of US$27.63 each. That means that even when the share price was below the current price of US$28.83, 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 33% of Christopher Gaskill's holding.
In the last year Summit Materials insiders didn't buy any company stock. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Many investors like to check how much of a company is owned by 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. It appears that Summit Materials insiders own 0.4% of the company, worth about US$14m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Summit Materials Tell Us?
It doesn't really mean much that no insider has traded Summit Materials shares in the last quarter. Still, the insider transactions at Summit Materials in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 2 warning signs for Summit Materials (1 is a bit unpleasant!) and we strongly recommend you look at these before investing.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.
What are the risks and opportunities for Summit Materials?
Trading at 41.3% below our estimate of its fair value
Earnings grew by 99.2% over the past year
Earnings are forecast to decline by an average of 8.7% per year for the next 3 years
Debt is not well covered by operating cash flow
Large one-off items impacting financial results
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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.
Summit Materials, Inc., through its subsidiaries, produces and sells construction materials and related downstream products for the public infrastructure, and residential and nonresidential end markets.
The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.
|Analysis Area||Score (0-6)|
Read more about these checks in the individual report sections or in our analysis model.
Good value with proven track record.