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

In this article, I will feature one industrial 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%.

BE Aerospace (NASDAQ:BEAV) designs, manufactures, sells, and services cabin interior products for commercial aircraft and business jets worldwide.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of BE Aerospace's insider-trading activity during the last 30 days by insider.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Wayne ExtonVPDec 193,000No29,864 shares9.1%
Thomas McCaffreyCFODec 16-1728,934No39,771 shares42.1%
Ryan PatchVPDec 16-178,346No24,471 shares25.4%
Werner LieberherrCOODec 16-1717,539No70,750 shares19.9%
Amin KhouryCEODec 16-1758,340No180,147 shares24.5%
Sean CromieVPDec 16-174,912No23,047 shares17.6%

There have been 121,071 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of BE Aerospace's insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
December 2013121,0710
November 20132,1080
October 201300
September 201300
August 20134,5000
July 20132,1260
June 201300
May 20137,8310
April 20132,1080
March 20136,9670
February 20133,7940
January 201300

There have been 150,505 shares sold, and there have been zero shares purchased by insiders since January 2013. The month of December has seen the most insider selling.

Financials

BE Aerospace reported the third-quarter financial results on October 23 with the following highlights:

Revenue$888.1 million
Net income$92.7 million
Cash$573.8 million
Debt$2.0 billion
Backlog$8.8 billion

(Source: Earnings presentation)

Outlook

BA Aerospace's guidance is as follows:

FY2013FY2014
RevenueN/A$4.0 billion
EPS$3.52$4.25

(click to enlarge)

(Source: Earnings presentation)

Competition

BE Aerospace's competitors include Wesco Aircraft (NYSE:WAIR), and United Technologies (NYSE:UTX). Here is a table comparing these companies.

CompanyBEAVWAIRUTX
Market Cap:9.01B2.07B103.59B
Employees:9,5001,354218,000
Qtrly Rev Growth (yoy):0.160.110.03
Revenue:3.38B901.61M62.31B
Gross Margin:0.380.360.28
EBITDA:727.70M192.18M11.09B
Operating Margin:0.190.200.15
Net Income:350.20M104.81M5.18B
EPS:3.381.096.92
P/E:25.4119.9316.32
P/S:2.652.291.66

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

Here is a table of these competitors' insider-trading activities during the last 30 days.

CompanyInsider buying / sharesInsider selling / shares
WAIR0244,398
UTX

0

0

Wesco Aircraft has also seen intensive insider selling during the last 30 days.

Conclusion

There have been six different insiders selling BE Aerospace, and there have not been any insiders buying BE Aerospace during the last 30 days. Five of these six insiders decreased their holdings by more than 10%. BE Aerospace has an insider ownership of 0.40%.

BE Aerospace has a $78 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $78 price target. I would place a stop loss at $88, which is the all-time high. The four main reasons for the proposed short entry are bearish Point and Figure chart, relatively high P/S ratio, relatively high P/E ratio, and the intensive insider-selling activity.

(click to enlarge)

Source: BE Aerospace: 6 Different Insiders Have Sold Shares During The Last 30 Days