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%.

Vulcan Materials Company (NYSE:VMC) engages in the production and sale of construction aggregates, as well as asphalt mix, ready-mixed concrete, and cement primarily in the United States.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Wayne HoustonSVPJan 1010,000No1,870 shares84.2%
Daniel SansoneCFOJan 109,500No27,998 shares + 2,500 options23.8%
David ClementsSVPDec 301,400No0 shares100%
Thomas HillCOODec 30-315,000No5,951 shares + 5,000 options31.3%

There have been 25,900 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of Vulcan Materials' insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
January 201419,5000
December 20136,4000
November 2013

1,400

0
October 201300
September 20131,9690
August 201304,000
July 201300
June 201300
May 201300
April 201300
March 20134,9000
February 201300
January 201300

There have been 34,169 shares sold, and there have been 4,000 shares purchased by insiders since January 2013. The month of January 2014 has seen the most insider selling.

Financials

Vulcan Materials reported the third-quarter financial results on November 4 with the following highlights:

Revenue$775.2 million
Net income$41.4 million
Cash$245.8 million
Debt$2.5 billion

(Source: Earnings presentation)

Outlook

Vulcan Materials expects operating earnings to improve in full-year 2013.

(Source: Earnings presentation)

Competition

Vulcan Materials' competitors include Cemex (NYSE:CX), and Martin Marietta Materials (NYSE:MLM). Here is a table comparing these companies.

CompanyVMCCXMLMIndustry Average (General Building Materials)
Market Cap:7.69B14.26B4.93B1.04B
Employees:7,02842,8534,9482.21K
Qtrly Rev Growth (yoy):0.120.030.120.04
Revenue:2.70B15.07B2.12B2.21B
Gross Margin:0.140.310.160.31
EBITDA:418.45M2.49B337.23M194.34M
Operating Margin:0.040.090.080.06
Net Income:15.15M-1.06B106.27MN/A
EPS:0.14-0.912.310.23
P/E:431.75N/A46.1916.23
PEG (5 yr expected):-65.18-12.342.661.39
P/S:2.830.922.300.54

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

Here is a table of these competitors' insider-trading activities during the last 12 months.

CompanyInsider buying / sharesInsider selling / shares
CXN/AN/A
MLM0101,602

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

Conclusion

There have been four different insiders selling Vulcan Materials, and there have not been any insiders buying Vulcan Materials during the last 30 days. All four of these insiders decreased their holdings by more than 10%. Vulcan Materials has an insider ownership of 0.10%.

There are six analyst buy ratings, eight neutral ratings, and one sell rating with an average price target of $57.30. Before entering short Vulcan Materials, 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, relatively high P/S ratio, and the intensive insider-selling activity.

Source: Vulcan Materials: 4 Different Insiders Have Sold Shares During The Last 30 Days