This Insider Has Just Sold Shares In The Home Depot, Inc. (NYSE:HD)

By
Simply Wall St
Published
August 26, 2021
NYSE:HD
Source: Shutterstock

We wouldn't blame The Home Depot, Inc. (NYSE:HD) shareholders if they were a little worried about the fact that Teresa Roseborough, the Executive VP recently netted about US$1.6m selling shares at an average price of US$329. That's a big disposal, and it decreased their holding size by 20%, which is notable but not too bad.

View our latest analysis for Home Depot

The Last 12 Months Of Insider Transactions At Home Depot

Over the last year, we can see that the biggest insider sale was by the Executive VP & Chief Information Officer, Matthew Carey, for US$6.0m worth of shares, at about US$279 per share. That means that an insider was selling shares at slightly below the current price (US$321). 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 38% of Matthew Carey's stake.

All up, insiders sold more shares in Home Depot than they bought, 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!

insider-trading-volume
NYSE:HD Insider Trading Volume August 27th 2021

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

Does Home Depot Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It's great to see that Home Depot insiders own 0.1% of the company, worth about US$350m. 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 Home Depot Insider Transactions Indicate?

An insider sold Home Depot shares recently, but they didn't buy any. Zooming out, the longer term picture doesn't give us much comfort. But since Home Depot 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. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Home Depot. For example - Home Depot has 2 warning signs we think you should be aware of.

But note: Home Depot 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, but not derivative transactions.

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