Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

In this article, I will feature one tech 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%.

ACI Worldwide (NASDAQ:ACIW) develops, markets, installs, and supports a line of software products and services for facilitating electronic payments worldwide.


(Click to enlarge)

Insider selling during the last 30 days

Here is a table of ACI Worldwide'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
Philip Heasley CEO Dec 2-17 133,900 Yes 308,630 shares + 412,229 options 15.7%
Dennis Byrnes EVP Dec 17 10,000 No 57,163 shares + 13,180 options 12.4%
David Morem EVP Nov 20 12,294 No 5,916 shares 67.5%

There have been 156,194 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 ACI Worldwide's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
December 2013 143,900 0
November 2013 112,294 0
October 2013 100,000 0
September 2013 50,000 0
August 2013 0 0
July 2013 0 0
June 2013 34,480 0
May 2013 27,927 0
April 2013 0 0
March 2013 163,826 0
February 2013 0 0
January 2013 0 0

There have been 632,427 shares sold and there have been zero shares purchased by insiders this year.

Financials

ACI Worldwide reported the third-quarter financial results on November 7 with the following highlights:

Revenue $213.9 million
Net income $13.8 million
Cash $166.5 million
Debt $764.3 million
Backlog (12-month) $740 million

Outlook

ACI Worldwide's full-year 2013 guidance is as follows:

Non-GAAP revenue $883-$905 million
Non-GAAP operating income $165-$175 million
Adjusted EBITDA $257-$267 million

Competition

ACI Worldwide's competitors include Fair Isaac Corporation (NYSE:FICO), and Fiserv (NASDAQ:FISV). Here is a table comparing these companies.

Company ACIW FICO FISV Industry Average (Technical & System Software)
Market Cap: 2.42B 2.01B 7.30B 478.75M
Employees: 3,530 2,482 20,000 873.00
Qtrly Rev Growth (yoy): 0.38 0.02 0.09 0.35
Revenue: 805.86M 743.44M 4.74B 1.30B
Gross Margin: 0.62 0.69 0.42 0.59
EBITDA: 196.03M 198.29M 1.37B 112.94M
Operating Margin: 0.17 0.22 0.23 0.13
Net Income: 63.14M 90.10M 593.00M N/A
EPS: 1.53 2.48 4.52 0.78
P/E: 41.15 23.48 12.52 23.14
PEG (5 yr expected): 1.54 2.62 1.33 1.47
P/S: 3.01 2.76 3.08 2.61

ACI Worldwide is trading at the highest P/E ratio among these three companies.

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

Company Insider buying / shares Insider selling / shares
FICO 8,000 467,194
FISV 0 107,479

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

Conclusion

There have been three different insiders selling ACI Worldwide and there have not been any insiders buying ACI Worldwide during the last 30 days. All three of these insiders decreased their holdings by more than 10%. ACI Worldwide has an insider ownership of 0.80%.

There is one analyst buy rating, five neutral ratings, and zero sell ratings with an average price target of $58.00. ACI Worldwide is trading at a P/E ratio of 41.15 and a forward P/E ratio of 20.73. Before entering short ACI Worldwide, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are relatively high P/E ratio, bearish analyst price targets, and the intensive insider-selling activity.

Source: ACI Worldwide: 3 Different Insiders Have Sold Shares During The Last 30 Days