1 Semi, 1 Toy Maker And 1 Industrial Goods Company With Recent Intensive Insider Selling

|
Includes: AZZ, MAT, SLAB
by: Markus Aarnio

There was intensive insider selling in E2open (NASDAQ:EOPN) in March this year at above $20.00. The company reported the full fiscal year 2013 financial results on April 16. The stock plunged after the earnings and is currently trading at $12.55, or 43% below the all time high made in early March.

Click to enlarge

With this episode in mind, I screened for stocks which have seen recent intensive insider selling. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

In this article, I will feature three stocks that met these three criteria of intensive insider selling in the last 30 days.

1. Mattel (NASDAQ:MAT) designs, manufactures, and markets various toy products.

Click to enlarge

Insider selling by insider (last 30 days)

  • Jean-Christophe Pean sold 6,400 shares on April 19 and currently holds 2,945 shares or less than 0.1% of the company. Jean-Christophe Pean has been Executive Vice President, North America since February 2012.
  • Christopher Sinclair sold 12,000 shares on April 18 and currently holds 20,069 shares or less than 0.1% of the company. Christopher Sinclair serves as a director of the company.
  • Bryan Stockton sold 150,000 shares on April 1-17 pursuant to a Rule 10b5-1 trading plan. Bryan Stockton currently holds 120,673 shares or less than 0.1% of the company. Bryan Stockton has been Chief Executive Officer and a director of Mattel since January 2012 and was named Chairman of the Board on January 1, 2013.
  • Robert Normile sold 12,000 shares on April 1 pursuant to a Rule 10b5-1 trading plan. Robert Normile currently holds 37,135 shares or less than 0.1% of the company. Robert Normile has been Executive Vice President, Chief Legal Officer and Secretary since February 2011.

Insider selling by calendar month

Here is a table of Mattel's insider trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
April 2013 180,400 0
March 2013 0 0
February 2013 610,763 0
January 2013 17,500 0
Click to enlarge

There have been 808,663 shares sold and zero shares purchased this year.

Financials

The company reported the first-quarter financial results on April 17 with the following highlights:

Revenue $995.6 million
Net income $38.5 million
Cash $1.3 billion
Debt $1.7 billion
Click to enlarge

Competition

Mattel's competitors include Hasbro (NASDAQ:HAS) and JAKKS Pacific (NASDAQ:JAKK). Here is a table comparing these companies.

Company MAT HAS JAKK Industry Average (Toys & Games)
Market Cap: 15.17B 5.99B 220.71M 545.22M
Employees: 28,000 5,500 828 966.00
Qtrly Rev Growth (yoy): 0.07 -0.03 -0.05 -0.12
Revenue: 6.49B 4.09B 666.76M 666.76M
Gross Margin: 0.54 0.51 0.30 0.42
EBITDA: 1.40B 749.25M 15.01M 77.11M
Operating Margin: 0.19 0.15 -0.01 0.13
Net Income: 799.43M 336.00M -104.80M N/A
EPS: 2.30 2.55 -4.37 1.24
P/E: 19.14 18.25 N/A 17.66
PEG (5 yr expected): 1.38 1.97 1.16 1.16
P/S: 2.34 1.47 0.33 1.04
Click to enlarge
Click to enlarge

Mattel is trading above the industry average P/S ratio, which could explain some of the insider selling.

My analysis

There have been five insider sell transactions and there have not been any insider buy transactions during the last 30 days. The stock is trading at a P/E ratio of 19.14 and a forward P/E ratio of 14.22. The company has a book value of $8.73 per share and the stock has a dividend yield of 3.27%. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/S ratio and the intensive insider selling activity.

2. AZZ incorporated (NYSE:AZZ) manufactures and sells electrical equipment and components for power generation, transmission and distribution, and industrial markets primarily in the United States and Canada.

Click to enlarge

Insider selling by insider (last 30 days)

  • Timothy Pendley sold 9,000 shares on April 22 and currently holds 32,030 shares or 0.1% of the company. Timothy Pendley is Senior Vice President, Galvanizing.
  • Richard Butler sold 2,000 shares on April 22 and currently holds 6,553 shares or less than 0.1% of the company. Richard Butler is Vice President, Corporate Controller.
  • Kirk Downey sold 8,338 shares on April 11 and currently holds 15,784 shares or less than 0.1% of the company. Kirk Downey serves as a director of the company.

Insider selling by calendar month

Here is a table of AZZ's insider trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
April 2013 19,338 0
March 2013 0 777
February 2013 0 0
January 2013 10,526 0
Click to enlarge

The month of April has seen the most insider selling this year.

Financials

The company reported the full fiscal year 2013, which ended February 28, financial results on April 8 with the following highlights:

Revenue $570.6 million
Net income $60.5 million
Cash $55.6 million
Debt $196.4 million
Click to enlarge

Outlook

The company's fiscal year 2014 guidance for revenues is in the range of $825 million to $900 million. The company's earnings for fiscal year 2014 are anticipated to be in the range of $2.65 and $2.95 per diluted share.

Competition

AZZ's competitors include ABB Ltd. (NYSE:ABB) and General Electric Company (NYSE:GE). Here is a table comparing these companies.

Company AZZ ABB GE Industry Average (Metal Fabrication)
Market Cap: 1.08B 48.70B 221.48B 253.05M
Employees: N/A 146,100 305,000 1.09K
Qtrly Rev Growth (yoy): 0.14 0.04 -0.01 0.24
Revenue: 570.59M 39.34B 146.72B 1.09B
Gross Margin: 0.29 0.29 0.37 0.20
EBITDA: 127.35M 5.22B 29.17B 85.17M
Operating Margin: 0.17 0.11 0.12 0.07
Net Income: 60.46M 2.70B 15.08B N/A
EPS: 2.37 1.18 1.35 0.07
P/E: 17.88 17.99 15.81 12.33
PEG (5 yr expected): 0.67 1.21 1.24 1.18
P/S: 1.89 1.24 1.51 0.45
Click to enlarge
Click to enlarge

AZZ is trading above the industry average P/S ratio, which could explain some of the insider selling.

My analysis

There have been three insider sell transactions and there have not been any insider buy transactions during the last 30 days. The stock is trading at a P/E ratio of 17.88 and a forward P/E ratio of 11.58. The company has a book value of $13.15 per share and the stock has a dividend yield of 1.32%. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/S ratio and the intensive insider selling activity.

3. Silicon Laboratories (NASDAQ:SLAB), a fabless semiconductor company, designs, develops, and markets analog-intensive and mixed-signal integrated circuits [ICs].

Click to enlarge

Insider selling by insider (last 30 days)

  • Robert Enloe sold 3,597 shares on April 18 pursuant to the Rule 10b5-1 trading plan. Robert Enloe currently holds 3,546 shares or less than 0.1% of the company. Robert Enloe serves as a director of the company.
  • Laurence Walker sold 3,750 shares on April 11 pursuant to the Rule 10b5-1 trading plan. Laurence Walker currently holds 3,625 shares or less than 0.1% of the company. Laurence Walker serves as a director of the company.
  • Jonathan Ivester sold 3,000 shares on April 9 pursuant to the Rule 10b5-1 trading plan. Jonathan Ivester currently holds 82,944 shares or 0.2% of the company. Jonathan Ivester is Senior Vice President of Worldwide Operations.
  • David Bresemann sold 1,000 shares on April 9 pursuant to the Rule 10b5-1 trading plan. David Bresemann currently holds 58,840 shares or 0.1% of the company. David Bresemann is Senior Vice President and Chief Product Officer.
  • Kurt Hoff sold 1,575 shares on April 1 pursuant to the Rule 10b5-1 trading plan. Kurt Hoff currently holds 34,285 shares or less than 0.1% of the company. Kurt Hoff is Senior Vice President of Worldwide Sales.

Insider selling by calendar month

Here is a table of Silicon Laboratories' insider trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
April 2013 12,922 0
March 2013 7,275 0
February 2013 17,903 0
January 2013 70,453 0
Click to enlarge

There have been 108,553 shares sold and zero shares purchased this year.

Financials

The company reported the full year 2012 financial results on January 30 with the following highlights:

Revenue $563.3 million
Net income $63.5 million
Cash $282.0 million
Debt $100.0 million
Click to enlarge

Outlook

The company expects revenue for the first quarter to be down sequentially four to eight percent.

Competition

Silicon Laboratories' competitors include Analog Devices (NYSE:ADI), Broadcom (BRCM) and Texas Instruments (NYSE:TXN). Here is a table comparing these companies.

Company SLAB ADI BRCM TXN Industry Average (Semiconductor - Specialized)
Market Cap: 1.72B 13.05B 18.55B 38.46B 220.48M
Employees: 997 9,200 11,300 34,151 945.00
Qtrly Rev Growth (yoy): 0.20 -0.04 0.15 -0.13 0.28
Revenue: 563.29M 2.68B 7.82B 12.82B 300.31M
Gross Margin: 0.60 0.64 0.49 0.50 0.35
EBITDA: 113.45M 923.85M 1.18B 4.00B 12.89M
Operating Margin: 0.15 0.30 0.09 0.21 -0.03
Net Income: 63.55M 643.08M 719.00M 1.73B N/A
EPS: 1.47 2.09 1.25 1.51 N/A
P/E: 27.83 20.42 26.08 23.05 18.33
PEG (5 yr expected): 0.86 6.28 0.77 2.88 0.84
P/S: 3.05 4.88 2.37 3.00 1.34
Click to enlarge
Click to enlarge

Silicon Laboratories is trading above the industry average P/S ratio, which could explain some of the insider selling.

My analysis

There have been five insider sell transactions and there have not been any insider buy transactions during the last 30 days. The stock is trading at a P/E ratio of 27.83 and a forward P/E ratio of 15.56. The company has a book value of $15.52 per share. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/S ratio and the intensive insider selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.