In this article, I will feature one grocery store that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:
- The stock was sold by three or more insiders within one month.
- The stock was not purchased by any insiders in the month of intensive selling.
- At least two sellers decreased their holdings by more than 10%.
The Kroger Co. (KR) operates as a retailer in the United States. The company also manufactures and processes food for sale in its supermarkets.
Insider selling during the last 30 days
Here is a table of Kroger's insider-trading activity during the last 30 days by insider.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Paul Heldman||EVP||Sep 26||80,000||No||224,104 shares||26.3%|
|Lynn Marmer||VP||Sep 25||3,675||No||37,524 shares||8.9%|
|Michael Schlotman||SVP||Sep 23||57,250||No||156,536 shares||26.8%|
|Robert Clark||VP||Sep 19||9,000||No||36,174 shares||19.9%|
|Pete Williams||SVP||Sep 18||20,000||No||79,313 shares||20.1%|
There have been 169,925 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.
Insider selling by calendar month
Here is a table of Kroger's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 777,585 shares sold and there have been zero shares purchased by insiders this year.
Kroger reported the second-quarter financial results on September 12 with the following highlights:
|Net income||$317 million|
|Net debt||$7.7 billion|
On September 12, Kroger maintained its net earnings guidance range of $2.73 to $2.80 per diluted share for fiscal 2013. This is consistent with the company's long term earnings per share growth rate guidance of 8 - 11%, plus a growing dividend.
Kroger raised identical supermarket sales, excluding fuel, growth guidance to approximately 3.0% to 3.5% for fiscal 2013. The previous guidance was 2.5% to 3.5%.
Kroger has the lowest P/S ratio among these four companies.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Only Kroger has seen intensive insider selling during the past 30 days.
There have been five different insiders selling Kroger and there have not been any insiders buying Kroger during the past 30 days. Four of these five insiders decreased their holdings by more than 10%. Kroger has an insider ownership of 0.70%.
There are nine analyst buy ratings, three neutral ratings, and two sell ratings, with an average price target of $41.25. Kroger is trading at a P/E ratio of 13.88 and a forward P/E ratio of 13.31. Kroger has a book value of $9.39 per share and the stock has a dividend yield of 1.58%.
Before entering short Kroger, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are bearish analyst target prices and the intensive insider selling activity.