Stock Analysis

Pinnacle West Capital Corporation (NYSE:PNW) insiders who sold earlier this year missed the bus as stock gained 6.3% last week

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While it’s been a great week for Pinnacle West Capital Corporation (NYSE:PNW) shareholders after stock gained 6.3%, not so much for insiders who sold stock over the past year. Had they waited, they might have been able to sell their stock at much higher prices and thereby received a better value on their investment.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Pinnacle West Capital

The Last 12 Months Of Insider Transactions At Pinnacle West Capital

The insider, Barbara Lockwood, made the biggest insider sale in the last 12 months. That single transaction was for US$259k worth of shares at a price of US$74.25 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$78.68. 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. It is worth noting that this sale was only 45% of Barbara Lockwood's holding. The only individual insider seller over the last year was Barbara Lockwood.

Barbara Lockwood divested 4.18k shares over the last 12 months at an average price of US$74.85. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

NYSE:PNW Insider Trading Volume March 17th 2023

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Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 0.3% of Pinnacle West Capital shares, worth about US$24m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Pinnacle West Capital Insiders?

The fact that there have been no Pinnacle West Capital insider transactions recently certainly doesn't bother us. Our analysis of Pinnacle West Capital insider transactions leaves us cautious. But we do like the fact that insiders own a fair chunk of the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 3 warning signs for Pinnacle West Capital (of which 1 is concerning!) you should know about.

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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, but not derivative transactions.

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