Insiders Are Selling Financial Engines

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 |  About: Financial Engines, Inc. (FNGN), Includes: AMP
by: Markus Aarnio

In this article, I will feature one financial sector stock 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%.

Financial Engines (NASDAQ:FNGN) provides independent, technology-enabled portfolio management services, investment advice, and retirement income services to participants in employer-sponsored defined contribution plans.

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Insider selling during the last 30 days

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

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Christopher Jones EVP Sep 23-Oct 16 32,500 Yes 61,562 shares + 70,186 options 19.8%
Raymond Sims CFO Oct 3-16 10,000 Yes 7,127 shares + 7,485 options 40.6%
Anne Tuttle EVP Oct 15 3,800 Yes 6,278 shares 37.7%
Jeffrey Maggioncalda CEO Sep 26-Oct 10 30,000 Yes 280,655 shares + 42,954 options 8.5%
Mary Lee Sharp EVP Oct 8 729

Yes

0 shares + 21,688 options 3.3%
Garry Hallee EVP Sep 24-Oct 8 19,640 Yes 124,990 shares 13.6%
Lawrence Raffone President Oct 3 7,500 Yes 35,615 17.4%
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There have been 104,169 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 Financial Engines' insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
October 2013 56,669 0
September 2013 94,729 0
August 2013 147,833 0
July 2013 139,730 0
June 2013 96,229 0
May 2013 258,036 0
April 2013 116,724 0
March 2013 149,312 0
February 2013 216,229 0
January 2013 96,078 0
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There have been 1,371,569 shares sold and there have been zero shares purchased by insiders this year.

Financials

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

Revenue $57.8 million
Net income $6.3 million
Cash $215.8 million
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Outlook

Financial Engines estimates that its 2013 revenue will be in the range of $233 million to $238 million, and its 2013 non-GAAP adjusted EBITDA will be in the range of $75 million to $77 million.

Competition

Financial Engines' competitors include Ameriprise Financial (NYSE:AMP). Here is a table comparing these two companies.

Company FNGN AMP Industry Average (Asset Management)
Market Cap: 2.79B 19.73B 374.50M
Employees: 380 12,235 219.00
Qtrly Rev Growth (yoy): 0.31 0.09 0.17
Revenue: 211.47M 10.62B 86.51M
Gross Margin: 0.62 0.53 0.79
EBITDA: 40.76M 2.87B 26.67M
Operating Margin: 0.17 0.25 0.29
Net Income: 23.77M 1.22B N/A
EPS: 0.46 5.71 0.15
P/E: 122.24 17.49 14.90
PEG (5 yr expected): 2.18 0.75 1.31
P/S : 13.31 1.85 4.86
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Financial Engines has higher P/S ratio than its direct competitor. Ameriprise Financial has seen 1,151,465 shares sold and zero shares purchased by insiders this year. Only Financial Engines has seen intensive insider selling during the past 30 days.

Conclusion

There have been seven different insiders selling Financial Engines and there have not been any insiders buying Financial Engines during the past 30 days. Five of these seven insiders decreased their holdings by more than 10%. Financial Engines has an insider ownership of 0.30%.

There are four analyst buy ratings, one neutral rating and zero sell ratings with an average price target of $52.50. The stock is trading at a P/E ratio of 122.24 and a forward P/E ratio of 64.51. The company has a book value of $5.93 per share and the stock has a dividend yield of 0.35%.

Before entering short Financial Engines, 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 price targets, high P/S ratio 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.