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The service sector has been the second-best performing group year to date with a gain of 21.5%.

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In this article, I will feature two service-sector 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. Nordstrom (NYSE:JWN), a fashion specialty retailer, offers apparel, shoes, cosmetics, and accessories for women, men, and children in the United States.

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Insider selling by insider (last 30 days)

  • James Nordstrom sold 28,519 shares on July 8 pursuant to a 10b5-1 trading plan. James Nordstrom currently holds 513,398 shares or 0.3% of the company. James Nordstrom is Executive Vice President and President, Nordstrom Direct.
  • James Howell sold 20,220 shares on July 5 pursuant to a 10b5-1 trading plan. James Howell currently holds 5,010 shares or less than 0.1% of the company. James Howell is Vice President, Finance.
  • Blake Nordstrom sold 80,522 shares on July 5 pursuant to a 10b5-1 trading plan. Blake Nordstrom currently holds 1,871,561 shares or 1.0% of the company. Blake Nordstrom is President of the company.
  • David Witman sold 12,219 shares on June 11-13 and currently holds 15,055 shares or less than 0.1% of the company. David Witman is Executive Vice President and General Merchandise Manager, Men's Apparel.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
July 2013129,2610
June 201349,6030
May 2013191,4940
April 201300
March 201324,9650
February 201300
January 201300

There have been 395,323 shares sold and there have been zero shares purchased by the insiders this year.

Financials

The company reported the first-quarter financial results on May 16, with the following highlights:

Revenue$2.7 billion
Net income$145 million
Cash$1.2 billion
Debt$3.1 billion

Outlook

The company expects annual earnings per diluted share of $3.65 to $3.80. This reflects full-year same-store sales increases of 3 to 5 percent and incorporates the performance of the first quarter. It also includes the impact of share repurchases in the first quarter, which is expected to increase earnings per diluted share by approximately $0.05.

Competition

Nordstrom competes with other national, regional, local and online retailers that may carry similar lines of merchandise, including department stores, specialty stores, off-price stores, boutiques and Internet businesses. Online retail shopping is rapidly evolving and Nordstrom expects competition in the e-commerce market to intensify in the future as the Internet facilitates competitive entry and comparison shopping. Nordstrom may lose market share to its competitors and Nordstrom's sales and profitability could suffer if it is unable to remain competitive in the key areas of price and value, fashion newness, quality of products, depth of selection, convenience, fulfillment, service and the shopping experience, including the online and store environment and location.

My analysis

There have been four 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 3.60%. There are 12 analyst buy ratings, 12 neutral ratings and two sell ratings with an average target price of $62.27. The stock is trading at a P/E ratio of 17.39 and a forward P/E ratio of 14.74. The company has a book value of $9.65 per share and the stock has a dividend yield of 1.92%. 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 the bearish analyst target prices and the intensive insider selling activity.

2. Green Dot Corporation (NYSE:GDOT), a financial services company, provides money management solutions in the United States.

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Insider selling by insider (last 30 days)

  • John Keatley sold 49,000 shares on July 1-9 pursuant to a Rule 10b5-1 trading plan. John Keatley currently holds 97,931 shares and 131,826 options or 0.7% of the company. John Keatley has served as Chief Financial Officer since October 2006.
  • Konstantinos Sgoutas sold 10,000 shares on July 1 pursuant to a Rule 10b5-1 trading plan. Konstantinos Sgoutas currently holds 14,912 shares and 5,909 options or less than 0.1% of the company. Konstantinos Sgoutas is Chief Revenue Officer of the company.
  • John Ricci sold 25,000 shares on July 1 pursuant to a Rule 10b5-1 trading plan. John Ricci currently holds 90,999 shares and 49,914 options or 0.4% of the company. John Ricci has served as General Counsel since June 2004 and as Secretary since April 2003.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
July 201384,0000
June 201300
May 2013100,0000
April 201300
March 201300
February 201300
January 201300

There have been 184,000 shares sold and there have been zero shares purchased by the insiders this year.

Financials

The company reported the first-quarter financial results on April 30 with the following highlights:

Revenue$154.1 million
Net income$15.6 million
Cash$470.9 million
Debt$53.2 million

Outlook

  • For 2013, Green Dot expects full year non-GAAP total operating revenues to be in the range of $525 million to $550 million.
  • Green Dot expects adjusted EBITDA to be between $85 million and $100 million for the full year, and full-year non-GAAP diluted EPS to be between $0.95 and $1.20.

Competition

Green Dot's competitors include Blackhawk Network Holdings (NASDAQ:HAWK). Here is a table comparing these two companies.

CompanyGDOTHAWK
Market Cap:717.36M1.33B
Employees:596725
Qtrly Rev Growth (yoy):0.080.22
Revenue:565.92M992.62M
Gross Margin:0.860.25
EBITDA:83.07M89.44M
Operating Margin:0.130.07
Net Income:38.99M44.19M
EPS:1.060.88
P/E:18.8229.09
PEG (5 yr expected):2.031.26
P/S:1.271.34

Green Dot's P/S ratio is in line with its direct competitor's.

My analysis

There have been three different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. There are five analyst buy ratings, 15 neutral ratings and two sell ratings with an average target price of $18.04. The stock is trading at a P/E ratio of 18.82 and a forward P/E ratio of 15.54. The company has a book value of $9.94 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 the bearish analyst target prices 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.

Source: 2 Service-Sector Companies With Recent Intensive Insider Selling