Don't Ignore The Insider Selling In DICK'S Sporting Goods

Some DICK'S Sporting Goods, Inc. (NYSE:DKS) shareholders may be a little concerned to see that the Lead Independent Director, Lawrence Schorr, recently sold a substantial US$1.7m worth of stock at a price of US$232 per share. That's a big disposal, and it decreased their holding size by 13%, which is notable but not too bad.

View our latest analysis for DICK'S Sporting Goods

The Last 12 Months Of Insider Transactions At DICK'S Sporting Goods

The Executive VP & CFO, Navdeep Gupta, made the biggest insider sale in the last 12 months. That single transaction was for US$2.9m worth of shares at a price of US$222 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$229. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 13% of Navdeep Gupta's holding.

All up, insiders sold more shares in DICK'S Sporting Goods than they bought, over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Insider Ownership Of DICK'S Sporting Goods

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. DICK'S Sporting Goods insiders own 30% of the company, currently worth about US$5.7b 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 Do The DICK'S Sporting Goods Insider Transactions Indicate?

The insider sales have outweighed the insider buying, at DICK'S Sporting Goods, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But since DICK'S Sporting Goods 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. In terms of investment risks, we've identified 1 warning sign with DICK'S Sporting Goods and understanding this should be part of your investment process.

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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.