Stock Analysis

Did CarParts.com, Inc. (NASDAQ:PRTS) Insiders Sell Shares?

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NasdaqGS:PRTS
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We often see insiders buying up shares in companies that perform well over the long term. 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 we'll take a look at whether insiders have been buying or selling shares in CarParts.com, Inc. (NASDAQ:PRTS).

Do Insider Transactions Matter?

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 would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

Check out our latest analysis for CarParts.com

The Last 12 Months Of Insider Transactions At CarParts.com

In the last twelve months, the biggest single sale by an insider was when the Director, Mehran Nia, sold US$26m worth of shares at a price of US$13.00 per share. That means that an insider was selling shares at slightly below the current price (US$15.85). 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 only 44% of Mehran Nia's holding.

In the last twelve months insiders purchased 39.61k shares for US$358k. But they sold 4.31m shares for US$54m. All up, insiders sold more shares in CarParts.com than they bought, over the last year. The sellers received a price of around US$12.61, on average. It's not particularly great to see insiders were selling shares at below recent prices. Since insiders sell for many reasons, we wouldn't put too much weight on it. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NasdaqGS:PRTS Insider Trading Volume March 12th 2021

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Does CarParts.com Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. CarParts.com insiders own 19% of the company, currently worth about US$139m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About CarParts.com Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of CarParts.com insider transactions don't fill us with confidence. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing CarParts.com. Every company has risks, and we've spotted 2 warning signs for CarParts.com you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 CarParts.com?

CarParts.com, Inc., together with its subsidiaries, operates as an online provider of aftermarket auto parts and accessories in the United States and the Philippines.

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Rewards

  • Trading at 76.2% below our estimate of its fair value

  • Earnings are forecast to grow 54.48% per year

  • Became profitable this year

Risks

  • Shareholders have been diluted in the past year

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