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The consumer goods sector has been the third-worst performing group year to date with a gain of just 5.4%.

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In this article, I will feature two consumer goods companies that have seen intensive insider selling during the last 30 days. 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%.

1. Ford Motor Company (NYSE:F) engages in the development, manufacture, distribution, and service of vehicles, parts, and accessories worldwide.

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Insider selling by insider (last 30 days)

  • John Fleming sold 150,000 shares on June 5 and currently holds 611,913 shares or less than 0.1% of the company. John Fleming is Executive Vice President, Global Manufacturing and Labor Affairs.
  • Thomas Brown sold 100,000 shares on June 4 and currently holds 272,419 shares or less than 0.1% of the company. Thomas Brown is Group Vice President, Global Purchasing.
  • Nicholas Smither sold 40,775 shares on May 22 and currently holds 250,173 shares or less than 0.1% of the company. Nicholas Smither is Group Vice President and Chief Information Officer.
  • Robert Shanks sold 30,000 shares on May 22 and currently holds 272,752 shares or less than 0.1% of the company. Robert Shanks is Executive Vice President and Chief Financial Officer.
  • David Leitch sold 34,510 shares on May 22 and currently holds 253,893 shares or less than 0.1% of the company. David Leitch is Group Vice President and General Counsel.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
June 2013250,0000
May 2013233,2010
April 201300
March 2013337,1230
February 2013296,8930
January 201300

There have been 1,117,217 shares sold and zero shares purchased by the insiders this year.

Financials

The company reported the first-quarter financial results on April 24 with the following highlights:

Revenue$35.8 billion
Net income$1.6 billion
Net cash$8.2 billion

Outlook

For full year 2013, Ford expects total company pre-tax profit about equal to 2012, operating margin about equal to or lower than 2012, and Automotive operating-related cash flow higher than 2012.

Competition

Ford's competitors include General Motors Company (NYSE:GM) and Toyota Motor Corporation (NYSE:TM). Here is a table comparing these companies.

CompanyFGMTMIndustry Average (Auto Manufacturers - Major)
Market Cap:58.97B44.28B189.33B59.71B
Employees:171,000217,000333,498106.47K
Qtrly Rev Growth (yoy):0.10-0.020.020.42
Revenue:137.62B151.38B280.37B113.39B
Gross Margin:0.140.100.160.22
EBITDA:12.00B7.89B30.83B13.44B
Operating Margin:0.050.010.060.08
Net Income:5.88B4.72B12.23BN/A
EPS:1.482.927.727.71
P/E:10.1711.0515.499.05
PEG (5 yr expected):0.890.640.320.72
P/S:0.420.300.660.57

Ford's P/S ratio is below the industry average.

My analysis

There have been five different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. The company has an insider ownership of 0.40%. The stock is trading at a P/E ratio of 10.17 and a forward P/E ratio of 8.96. The company has a book value of $4.49 per share and the stock has a dividend yield of 2.67%. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The main reason for the proposed short entry is the intensive insider selling activity.

2. PVH Corp. (NYSE:PVH) operates as an apparel company in the United States and internationally.

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Insider selling by insider (last 30 days)

  • Ludovicus Onnink sold 24,728 shares on June 3-18 pursuant to a Rule 10b5-1 trading plan adopted by Elmira 5 B.V. on April 4, 2013. Ludovicus Onnink currently controls 43,054 shares or less than 0.1% of the company. Ludovicus Onnink is Chief Operating Officer, Tommy Hilfiger Group.
  • Fred Gehring sold 122,710 shares on June 3-18 pursuant to a Rule 10b5-1 trading plan adopted by Elmira 5 B.V. on April 4, 2013. Fred Gehring currently controls 190,486 shares or 0.3% of the company. Fred Gehring is Chief Executive Officer, Tommy Hilfiger and PVH International Operations.
  • Michael Shaffer sold 13,325 shares on June 14 and currently holds 39,674 shares or less than 0.1% of the company. Michael Shaffer is Executive Vice President and Chief Operating & Financial Officer for PVH.
  • Francis Duane sold 35,875 shares on June 14 and currently holds 26,323 shares or less than 0.1% of the company. Francis Duane is the Chief Executive Officer of Wholesale Apparel at PVH and has held this role since 2006.
  • Helen McCluskey sold 15,000 shares on June 14 and currently holds 16,670 shares or less than 0.1% of the company. Helen McCluskey serves as a director of the company.
  • Paul Murry sold 21,019 shares on June 14 and currently holds 14,418 shares or less than 0.1% of the company. Paul Murry is President and Chief Executive Officer of Calvin Klein.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
June 2013232,6570
May 2013147,4460
April 201356,8630
March 201300
February 201300
January 20135,0000

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

Financials

The company reported the first-quarter, which ended May 5, financial results on June 12 with the following highlights:

Revenue$1.9 billion
Net loss$20.0 million
Cash$746.3 million
Debt$4.5 billion

Outlook

  • The company projects that revenue in 2013 will be approximately $8.2 billion and non-GAAP earnings per share will be approximately $7.00, as compared to the $6.58 in 2012.
  • Revenue in the second quarter of 2013 is expected to be approximately $1.9 billion and non-GAAP earnings per share for the second quarter is currently projected to be approximately $1.35 as compared to $1.28 in the prior year's second quarter.

Competition

PVH's competitors include The Jones Group (NYSE:JNY), Perry Ellis International (NASDAQ:PERY) and Ralph Lauren Corporation (NYSE:RL). Here is a table comparing these companies.

CompanyPVHJNYPERYRL
Market Cap:9.81B1.02B319.56M15.37B
Employees:11,8006,2502,60014,000
Qtrly Rev Growth (yoy):0.340.08-0.010.01
Revenue:6.53B3.87B966.35M6.94B
Gross Margin:0.530.360.330.60
EBITDA:811.27M201.40M58.67M1.39B
Operating Margin:0.090.030.050.17
Net Income:305.77M-52.80M16.44M750.00M
EPS:4.17-0.711.078.00
P/E:28.99N/A19.8221.14
PEG (5 yr expected):1.403.990.781.76
P/S:1.490.270.332.23

PVH's P/S ratio is the second highest among these four companies.

My analysis

There have been six different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. The company has an insider ownership of 0.50%. The stock is trading at a P/E ratio of 28.99 and a forward P/E ratio of 14.66. The company has a book value of $44.69 per share and the stock has a dividend yield of 0.12%. 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/E ratio and the intensive insider selling activity.

Source: 2 Consumer Goods Companies With Recent Intensive Insider Selling