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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%.

Acuity Brands (NYSE:AYI) designs, produces, and distributes lighting solutions, components, and services for commercial, institutional, industrial, infrastructure, and residential applications in North America and internationally.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Peter BrowningDirectorJan 16927No1,464 shares38.8%
Julia NorthDirectorJan 131,815No2,626 shares40.9%
Richard ReeceCFOJan 1328,500No108,086 shares20.9%
Vernon NagelCEOJan 1381,518No277,697 shares22.7%

There have been 112,760 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of Acuity Brands' insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
January 2014112,7600
December 201300
November 201300
October 201326,6300
September 201300
August 20131,8150
July 2013118,0000
June 201300
May 201300
April 201325,3350
March 201300
February 20131,8150
January 201300

There have been 286,355 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

Acuity Brands reported the fiscal 2014 first-quarter, which ended November 30, financial results on January 9 with the following highlights:

Revenue$574.7 million
Net income$44.5 million
Cash$398.1 million
Debt$353.6 million

Outlook

Third-party forecasts and leading indicators suggest that the growth rate for the North American lighting market, which includes renovation and retrofit activity, will be in the mid-single digit range during 2014.

Competition

Acuity Brands' competitors include Eaton Corporation's (NYSE:ETN) Cooper Lighting division, Hubbell Incorporated (NYSE:HUB.B), and Koninklijke Philips N.V. (NYSE:PHG). Here is a table comparing these companies.

CompanyAYIETNHUB.BPHGIndustry Average (Diversified Electronics)
Market Cap:5.53B36.69B7.01B34.59B157.00M
Employees:6,500102,000N/A116,266710.00
Qtrly Rev Growth (yoy):0.200.420.06-0.040.06
Revenue:2.18B20.85B3.13B31.88B221.91M
Gross Margin:0.410.30N/A0.410.26
EBITDA:310.50M2.92B563.10M4.33B13.80M
Operating Margin:0.120.100.160.090.04
Net Income:143.80M1.56B315.40M840.26MN/A
EPS:3.373.445.290.850.06
P/E:38.6922.4422.4044.5616.38
PEG (5 yr expected):2.141.43N/A19.631.00
P/S:2.571.752.241.090.73

Acuity Brands has the highest P/S ratio among these four companies.

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

CompanyInsider buying / sharesInsider selling / shares
ETN0695,727
HUB.BN/AN/A
PHGN/AN/A

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

Conclusion

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

There are three analyst buy ratings, 11 neutral ratings, and one sell rating with an average price target of $120.33. Before going short Acuity Brands, 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: Acuity Brands: 4 Different Insiders Have Sold Shares This Year