WageWorks: 4 Different Insiders Have Sold Shares This Month

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 |  About: WageWorks, Inc. (WAGE)
by: Markus Aarnio

In this article, I will feature one services 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%.

WageWorks (NYSE:WAGE) provides tax-advantaged programs for consumer-directed health, commuter, and other employee spending account benefits (CDBs) in the United States.

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Insider selling during the last 30 days

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

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Vantagepoint Venture Associates IV LLC 10% Owner Nov 15-21 386,815 No 3,427,188 shares 10.1%
John Larson Director Nov 15 13,000 No 49,139 shares 20.9%
Richard Berkeley Director Nov 13-15 37,500 No

0 shares

100%
Kimberly Jackson SVP Nov 13 21,000 No 2,084 shares + 22,500 options 46.1%
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There have been 458,315 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 WageWorks' insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
November 2013 458,315 0
October 2013 0 0
September 2013 10,000 37,500
August 2013 3,435,500 0
July 2013 40,156 0
June 2013 935,285 0
May 2013 0 0
April 2013 0 0
March 2013 5,975,782 4,000
February 2013 0 0
January 2013 0 0
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There have been 10,855,038 shares sold and there have been 41,500 shares purchased by insiders this year.

Financials

WageWorks reported the third-quarter financial results on November 5 with the following highlights:

Revenue $53.6 million
Net income $7.8 million
Cash $309.1 million
Debt $29.4 million
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Outlook

WageWorks' guidance is as follows:

  Q4/2013 FY/2013
Revenue $52.7-$54.2 million $216.9-$218.4 million
GAAP net income $1.7-$3.2 million $18.1-$19.6 million
Non-GAAP net income $4.7-$6.0 million $24.8-$26.1 million
Non-GAAP adjusted EBITDA $11.5-$13 million $54.5-$56 million
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Competition

WageWorks' competitors include Aetna (NYSE:AET), Automatic Data Processing (NASDAQ:ADP), and Aon Corporation (NYSE:AON). Here is a table comparing these companies.

Company WAGE AET ADP AON Industry Average (Management Services)
Market Cap: 1.94B 24.91B 38.52B 24.85B 118.35M
Employees: 873 35,000 60,000 64,725 542.00
Qtrly Rev Growth (yoy): 0.26 0.46 0.08 0.02 1.23
Revenue: 210.90M 44.04B 11.51B 11.69B 139.68M
Gross Margin: 0.64 0.25 0.49 0.41 0.39
EBITDA: 45.16M 3.92B 2.41B 2.23B 11.76M
Operating Margin: 0.16 0.08 0.18 0.14 0.06
Net Income: 19.12M 1.73B 1.39B 1.06B N/A
EPS: 0.59 4.95 2.94 3.32 -0.50
P/E: 95.00 13.70 27.21 24.85 18.45
PEG (5 yr expected): 4.84 1.13 2.66 1.58 1.82
P/S: 9.02 0.56 3.34 2.10 0.85
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WageWorks has the highest 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
AET 4,035 222,034
ADP 0 202,660
AON 25,000 280,859
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Aetna has also seen intensive insider selling during the last 30 days.

Conclusion

There have been four different insiders selling WageWorks and there have not been any insiders buying WageWorks during the last 30 days. All four of these insiders decreased their holdings by more than 10%. WageWorks has an insider ownership of 0.20%.

WageWorks is trading at a P/E ratio of 95.00, and a forward P/E ratio of 65.17. The company has a book value of $6.24 per share.

Before entering short WageWorks, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively 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.