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In this article, I will feature one business services company that has 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%.

Infoblox (NYSE:BLOX) develops, markets and sells automated network control solutions worldwide.

(click to enlarge)

Insider selling during the last 30 days

  • Christopher Andrews sold 60,000 shares on September 12, and currently holds 122,708 shares and 55,414 options or 0.4% of the company. Christopher Andrews is Executive Vice President, Worldwide Field Operations. Christopher Andrews decreased his holdings by 25.2% in September.
  • Steve Nye sold 50,000 shares on September 10, and currently holds 1,020 shares and 164,591 options or 0.3% of the company. Steve Nye is Executive Vice President of Product Strategy & Corporate Development. Steve Nye decreased his holdings by 23.2% in September.
  • Michael Goguen sold 35,128 shares on August 26 - September 10, pursuant to a Rule 10b5-1 trading plan. Michael Goguen currently controls 333,715 shares or 0.7% of the company. Michael Goguen has served as a member of the board of directors since April 2003, and as the chairman of the board since April 2012. Michael Goguen decreased his holdings by 9.5% during the last 30 days.
  • Fred Gerson sold 5,000 shares on September 10, and currently controls 5,000 shares or less than 0.1% of the company. Fred Gerson has served as a member of the board of directors since December 2011. Fred Gerson decreased his holdings by 9.5% in September.
  • Sohail Parekh sold 18,400 shares on August 19 - September 9, pursuant to a Rule 10b5-1 trading plan. Sohail Parekh currently holds 30,000 shares and 79,706 options or 0.2% of the company. Sohail Parekh is Executive Vice President, Engineering. Sohail Parekh decreased his holdings by 14.4% during the last 30 days.
  • Frank Marshall sold 12,500 shares on September 3, pursuant to a Rule 10b5-1 trading plan. Frank Marshall currently controls 26,102 shares or less than 0.1% of the company. Frank Marshall serves as a director of the company. Frank Marshall decreased his holdings by 32.4% in September.
  • David Gee sold 8,333 shares on September 3, pursuant to a Rule 10b5-1 trading plan. David Gee currently holds 23,000 shares and 193,752 options or 0.4% of the company. David Gee is Executive Vice President of Marketing. David Gee decreased his holdings by 3.7% in September.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
September 2013162,5970
August 201361,8610
July 201366,4610
June 2013385,9000
May 201379,5290
April 201341,3330
March 2013455,0350
February 2013109,2400
January 201384,7430

There have been 1,446,699 shares sold and there have been zero shares purchased by insiders this year.

Financials

Infoblox reported the full fiscal year 2013, which ended July 31, financial results on September 5, with the following highlights:

Revenue$225.0 million
Net loss (GAAP)$4.4 million
Net income (non-GAAP)$20.0 million
Cash$209.3 million

Outlook

For the first fiscal quarter ending October 31, 2013, Infoblox currently expects:

  • Total net revenue in the range of $62.5 million to $63.5 million;
  • Non-GAAP gross margin to be approximately 78%;
  • Non-GAAP operating margin in the range of 8% to 9%; and
  • Non-GAAP diluted net income per share to be in the range of $0.08 to $0.09, assuming approximately 56.8 million shares on a non-GAAP diluted weighted-average share basis.

For the fiscal year ending July 31, 2014, Infoblox currently expects:

  • Total net revenue in the range of $270 million to $276 million;
  • Non-GAAP gross margin to be approximately 78%;
  • Non-GAAP operating margin in the range of 10% to 12%; and
  • Non-GAAP EPS to be in the range of $0.44 to $0.55, assuming approximately 57.3 million shares on a non-GAAP diluted weighted-average share basis.

Competition

Infoblox's competitors include Alcatel-Lucent (NYSE:ALU), Hewlett-Packard (NYSE:HPQ) and International Business Machines (NYSE:IBM). Here is a table comparing these companies.

CompanyBLOXALUHPQIBM
Market Cap:2.30B7.84B42.57B210.51B
Employees:N/A72,344331,800434,246
Qtrly Rev Growth (yoy):0.400.02-0.08-0.03
Revenue:225.04M18.81B113.13B102.38B
Gross Margin:0.790.300.240.49
EBITDA:3.53M1.13B13.58B26.23B
Operating Margin:-0.010.020.080.21
Net Income:-4.41M-3.23B-3.16B15.91B
EPS:-0.09-1.41-1.6314.09
P/E:N/AN/AN/A13.64
PEG (5 yr expected):4.200.289.211.14
P/S:10.290.420.372.04

Infoblox has the highest P/S ratio among these four companies. Hewlett-Packard has seen three insider sell transactions this year. IBM has seen 23 insider sell transactions and one insider buy transaction this year.

Conclusion

There have been seven different insiders selling Infoblox and there have not been any insiders buying Infoblox during the past 30 days. Four of these seven insiders decreased their holdings by more than 10%. Infoblox has an insider ownership of 2.90%.

There are eight analyst buy ratings, two neutral ratings and zero sell ratings with an average price target of $42.38. The stock is trading at a forward P/E ratio of 57.19 and the company has a book value of $3.73 per share.

Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are bearish analyst target prices, high P/S ratio and the intensive insider selling activity.

Source: Insiders Are Selling Infoblox