Don't Ignore The Insider Selling In American Eagle Outfitters

We wouldn't blame American Eagle Outfitters, Inc. (NYSE:AEO) shareholders if they were a little worried about the fact that Jay Schottenstein, the Executive Chairman of the Board & CEO recently netted about US$20m selling shares at an average price of US$20.04. However, that sale only accounted for 7.5% of their holding, so arguably it doesn't say much about their conviction.

View our latest analysis for American Eagle Outfitters

American Eagle Outfitters Insider Transactions Over The Last Year

In fact, the recent sale by Jay Schottenstein was the biggest sale of American Eagle Outfitters shares made by an insider individual in the last twelve months, according to our records. That means that an insider was selling shares at slightly below the current price (US$20.69). 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 7.5% of Jay Schottenstein's holding.

American Eagle Outfitters insiders didn't buy any shares over the last year. 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!

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Does American Eagle Outfitters Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that American Eagle Outfitters insiders own 7.1% of the company, worth about US$279m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About American Eagle Outfitters Insiders?

Insiders sold American Eagle Outfitters shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. But it is good to see that American Eagle Outfitters is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing American Eagle Outfitters. Case in point: We've spotted 3 warning signs for American Eagle Outfitters you should be aware of.

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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.