Insiders of Methode Electronics Getting Good Value On Their US$513.6k Investment

Methode Electronics, Inc. (NYSE:MEI) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 13% resulting in a US$36m addition to the company’s market value. In other words, the original US$513.6k purchase is now worth US$594.0k.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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The Last 12 Months Of Insider Transactions At Methode Electronics

Over the last year, we can see that the biggest insider purchase was by President Jonathan DeGaynor for US$211k worth of shares, at about US$6.46 per share. We do like to see buying, but this purchase was made at well below the current price of US$9.00. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Methode Electronics insiders may have bought shares in the last year, but they didn't sell any. The average buy price was around US$7.78. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

View our latest analysis for Methode Electronics

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Insiders At Methode Electronics Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Methode Electronics. Senior Vice President of Global Automotive Business Lars Ullrich spent US$101k on stock, and there wasn't any selling. That shows some optimism about the company's future.

Does Methode Electronics 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Methode Electronics insiders own 3.2% of the company, worth about US$10m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Methode Electronics Insider Transactions Indicate?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Methode Electronics insiders are well aligned, and that they may think the share price is too low. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example - Methode Electronics has 1 warning sign we think 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.