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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%.

General Dynamics Corporation (NYSE:GD) provides business aviation; combat vehicles, weapons systems, and munitions; military and commercial shipbuilding; and communications and information technology products and services worldwide.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Kimberly KuryeaVPFeb 207,676No25,160 shares + 1,360 options22.4%
Mark RoualetEVPFeb 1932,502No92,971 shares25.9%
Daniel JohnsonVPFeb 1878,480No46,902 shares62.6%
Larry FlynnVPFeb 665,115No57,038 shares + 19,555 options46.0%
Gregory GallopoulosSVPJan 3034,178No84,455 shares28.8%
Robert WalmsleyDirectorJan 274,456No13,311 shares25.1%

There have been 222,407 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of General Dynamics' insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
February 2014183,7730
January 201487,7620
December 201326,9250
November 2013101,2030
October 201300
September 2013209,8010
August 201316,4640
July 201364,4840
June 201300
May 2013543,9770
April 2013177,5370
March 201300
February 201305,000
January 201300

There have been 1,351,926 shares sold, and there have been 5,000 shares purchased by insiders since January 2013.

Financials

General Dynamics reported the full-year 2013 financial results on January 22 with the following highlights:

Revenue$31.2 billion
Net income$2.4 billion
Cash$5.3 billion
Debt$3.9 billion
Backlog$46 billion

GD Revenue (<a href=

General Dynamics' revenues peaked two years ago.

Outlook

General Dynamics' 2014 guidance is as follows:

Revenue~$30 billion
EPS$6.80-$6.85

Competition

General Dynamics' competitors include Boeing (NYSE:BA), Lockheed Martin (NYSE:LMT), and Textron (NYSE:TXT). Here is a table comparing these companies.

CompanyGDBALMTTXT
Market Cap:38.14B95.62B52.57B11.04B
Employees:96,000168,400115,00032,000
Qtrly Rev Growth (yoy):0.000.07-0.050.04
Revenue:31.22B86.62B45.36B12.10B
Gross Margin:0.180.150.100.16
EBITDA:4.24B8.17B5.34B1.21B
Operating Margin:0.120.070.100.07
Net Income:2.49B4.58B2.95B498.00M
EPS:6.675.969.141.75
P/E:16.2921.5718.0322.32
PEG (5 yr expected):1.851.672.181.07
P/S:1.221.111.170.91

General Dynamics has the highest P/S ratio among these four companies.

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

CompanyInsider buying / sharesInsider selling / shares
BA048,868
LMT098,228
TXT00

Lockheed Martin has also seen intensive insider selling during the last 30 days.

Conclusion

There have been six different insiders selling General Dynamics, and there have not been any insiders buying General Dynamics during the last 30 days. All six of these insiders decreased their holdings by more than 10%. General Dynamics has an insider ownership of 0.60%.

Before going short General Dynamics, 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/S ratio, weak revenue growth, 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.

Source: General Dynamics: 6 Different Insiders Have Sold Shares During The Last 30 Days