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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%.

Starbucks (NASDAQ:SBUX) operates as a roaster, marketer, and retailer of specialty coffee worldwide.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Troy AlsteadCFONov 25114,807No100,545 shares + 125,905 options33.6%
Clifford BurrowsGroup PresidentNov 2535,000No102,006 shares25.5%
Howard SchultzCEONov 21557,000No

18,784,468 shares + 566,469 options


There have been 706,807 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 Starbucks' insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
November 2013706,8070
October 201300
September 2013121,1030
August 2013471,608141,573
July 201300
June 201363,3850
May 2013626,6303,300
April 201320,0000
March 20131,083,2100
February 201358,0000
January 2013104,4490

There have been 3,255,192 shares sold and there have been 144,873 shares purchased by insiders this year.


Starbucks reported the fiscal 2013 full-year, which ended September 29, financial results on October 30 with the following highlights:

Revenue$14.9 billion
Net income$1.7 billion
Cash$3.2 billion
Debt$1.3 billion


Starbucks' guidance is as follows:

2014 revenue growth10% or greater
2014 EPS$2.55-$2.65
Q1/2014 EPS$0.67-$0.69
Q2/2014 EPS$0.54-$0.55

(click to enlarge)

(Source: November 19 presentation)


Starbucks' competitors include Green Mountain Coffee Roasters (NASDAQ:GMCR), and Farmer Brothers (NASDAQ:FARM). Here is a table comparing these companies.

Market Cap:61.51B10.06B320.78M
Qtrly Rev Growth (yoy):
Gross Margin:0.570.370.38
Operating Margin:
Net Income:8.30M483.23M-9.56M
PEG (5 yr expected):1.571.201.23

Starbucks has the highest P/S ratio among these three companies.

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

CompanyInsider buying / sharesInsider selling / shares

Only Starbucks has seen intensive insider selling during the last 30 days.


There have been three different insiders selling Starbucks and there have not been any insiders buying Starbucks during the last 30 days. Two of these three insiders decreased their holdings by more than 10%. Starbucks has an insider ownership of 2.60%.

Starbucks is trading at a P/E ratio of 8,162.00 and a forward P/E ratio of 25.70. The company has a book value of $5.96 per share and the stock has a dividend yield of 1.27%.

Before entering short Starbucks, 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.