Insiders At American Eagle Outfitters Sold US$1.2m In Stock, Alluding To Potential Weakness

Many American Eagle Outfitters, Inc. (NYSE:AEO) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for American Eagle Outfitters

The Last 12 Months Of Insider Transactions At American Eagle Outfitters

The President and Executive Creative Director of AE & Aerie, Jennifer Foyle, made the biggest insider sale in the last 12 months. That single transaction was for US$652k worth of shares at a price of US$24.66 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (US$22.38). So it may not shed much light on insider confidence at current levels.

In the last year American Eagle Outfitters 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. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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

Insiders At American Eagle Outfitters Have Sold Stock Recently

The last quarter saw substantial insider selling of American Eagle Outfitters shares. Specifically, insiders ditched US$1.2m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership Of American Eagle Outfitters

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. 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 5.9% of the company, worth about US$259m. 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 Do The American Eagle Outfitters Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. But since American Eagle Outfitters is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that American Eagle Outfitters has 3 warning signs and it would be unwise to ignore these.

But note: American Eagle Outfitters may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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 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.