Insiders Are Selling FleetCor Technologies

Oct.22.13 | About: FleetCor Technologies, (FLT)

In this article, I will feature one services sector 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%.

FleetCor Technologies (NYSE:FLT) provides fuel cards and workforce payment products and services to businesses, commercial fleets, oil companies, petroleum marketers, and government entities in North America, Latin America, and Europe.

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Insider selling during the last 30 days

Here is a table of FleetCor Technologies' insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Todd House COO Sep 26-Oct 15 20,000 Yes 10,000 shares 66.6%
Andrew Blazye CEO Sep 27-Oct 16 8,922 Yes 26,250 shares + 106,168 options 6.3%
Jeffrey Lamb EVP Oct 1 25,000 Yes 5,100 shares + 182,500 options 11.8%
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There have been 53,922 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 FleetCor's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
October 2013 39,461 0
September 2013 2,804,461 0
August 2013 82,653 0
July 2013 39,462 0
June 2013 58,069 0
May 2013 4,371,211 0
April 2013 53,367 0
March 2013 4,539,974 0
February 2013 153,833 0
January 2013 22,347 0
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There have been 12,164,838 shares sold and there have been zero shares purchased by insiders this year.

Financials

FleetCor reported the second-quarter financial results on August 1 with the following highlights:

Revenue $220.9 million
Net income $73.1 million
Cash $292.9 million
Debt $1.0 billion
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Outlook

On August 1, FleetCor raised its financial guidance for 2013 as follows:

  • Revenues, net between $825 million and $835 million, up from previous guidance range of $810 million to $820 million.
  • Adjusted net income between $322 million and $327 million, up from previous guidance range of $310 million to $320 million.
  • Adjusted net income per diluted share between $3.82 and $3.87, up from previous guidance range of $3.70 to $3.80.

Competition

FleetCor's competitors include U.S. Bancorp (NYSE:USB) and WEX Inc. (NYSE:WEX). Here is a table comparing these companies.

Company FLT USB WEX Industry Average (Business Services)
Market Cap: 9.19B 69.73B 3.41B 260.83M
Employees: 2,650 64,486 1,302 769.00
Qtrly Rev Growth (yoy): 0.28 0.01 0.17 0.15
Revenue: 804.07M 17.53B 673.62M 196.60M
Gross Margin: 0.77 N/A 0.56 0.37
EBITDA: 438.27M N/A 276.21M 22.07M
Operating Margin: 0.49 0.46 0.36 0.06
Net Income: 257.48M 5.51B 114.25M N/A
EPS: 3.03 2.97 2.92 0.07
P/E: 37.12 12.81 30.02 22.46
PEG (5 yr expected): 1.81 1.75 1.48 1.48
P/S: 11.43 3.98 5.06 1.88
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FleetCor has the highest P/S ratio among these three companies.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
USB 0 2,061,379
WEX 0 133,903
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Only FleetCor has seen intensive insider selling during the past 30 days.

Conclusion

There have been three different insiders selling FleetCor and there have not been any insiders buying FleetCor during the past 30 days. Two of these three insiders decreased their holdings by more than 10%. FleetCor has an insider ownership of 0.70%.

FleetCor is trading at a P/E ratio of 37.12 and a forward P/E ratio of 24.23. The company has a book value of $12.87 per share.

FleetCor has a $84 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $84 price target. I would place a stop loss at $114, which is the all-time high. The three main reasons for the proposed short entry are bearish Point and Figure chart, high P/S ratio, and the intensive insider selling activity.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in FLT over 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.