The Wet Seal: 3 Different Insiders Have Purchased Shares This Month

Mar.29.14 | About: The Wet (WTSL)

Summary

Three insiders purchased Wet Seal stock within one month.

The stock was sold by no insiders in the month of intensive purchasing.

Two of these three insiders increased their holdings by more than 10%.

The Wet Seal (NASDAQ:WTSL) operates stores that sell fashionable and contemporary apparel and accessory items for female customers.

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Insider buying during the last 30 days

Here is a table of Wet Seal's insider activity during the last 30 days.

Name Title Trade Date Shares Purchased Current Ownership Increase In Shares
John Goodman CEO March 27 42,016 891,540 shares +4.9%
Adam Rothstein Director March 25-26 48,104 100,000 shares +92.7%
John Mills Director March 26 25,000 142,506 shares +21.3%
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There have been 115,120 shares purchased by insiders during the last 30 days.

Insider buying by calendar month

Here is a table of Wet Seal's insider activity by calendar month.

Month Insider buying / shares Insider selling / shares
March 2014 115,120 0
February 2014 0 0
January 2014 0 0
December 2013 0 0
November 2013 0 0
October 2013 0 0
September 2013 0 0
August 2013 23,480 0
July 2013 0 0
June 2013 5,000 0
May 2013 0 0
April 2013 62,500 0
March 2013 0 0
February 2013 218,256 0
January 2013 0 0
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There have been 424,356 shares purchased, and there have been zero shares sold by insiders since January 2013.

Financials

Wet Seal reported the fiscal 2013 full-year, which ended February 1, financial results on March 20 with the following highlights:

Revenue $530.1 million
Net loss $38.4 million
Cash $46.2 million
Debt $0
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The three insiders purchased their shares after these results.

On March 26, Wet Seal closed a $27 million financing.

Outlook

Wet Seal's first-quarter guidance is as follows:

Net loss $0.16-$0.19 per share
Comparable store sales growth negative mid- to high-teens
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Competition

Wet Seal's competitors include American Eagle Outfitters (NYSE:AEO), Bebe Stores (NASDAQ:BEBE), and The Gap, Inc (NYSE:GPS). Here is a table comparing these companies.

Company WTSL AEO BEBE GPS Industry Average (Apparel Stores)
Market Cap: 107.22M 2.39B 489.30M 17.98B 363.62M
Employees: N/A N/A 1,208 N/A 8.18K
Qtrly Rev Growth (yoy): -0.23 -0.07 -0.04 -0.03 0.00
Revenue: 530.13M 3.31B 476.16M 16.15B 987.38M
Gross Margin: 0.26 0.35 0.32 0.39 0.55
EBITDA: -9.33M 355.97M -22.67M 2.62B 79.75M
Operating Margin: -0.04 0.07 -0.09 0.13 0.10
Net Income: -38.38M 82.98M -84.64M 1.28B N/A
EPS: -0.45 0.43 -1.07 2.74 0.19
P/E: N/A 28.77 N/A 14.73 29.17
PEG (5 yr expected): -0.08 2.12 -1.04 1.04 1.04
P/S: 0.19 0.71 1.01 1.10 0.37
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Wet Seal has the lowest P/S ratio among these four companies.

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

Company Insider buying / shares Insider selling / shares
AEO 506,700 341,352
BEBE 0 0
GPS 0 430,862
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Only Wet Seal has seen intensive insider buying during the last 30 days.

Conclusion

There have been three different insiders buying Wet Seal, and there have not been any insiders selling Wet Seal during the last 30 days. Two of these three insiders increased their holdings by more than 10%. Wet Seal has an insider ownership of 3.01%.

The three insiders purchased their shares at prices ranging from $1.15 to $1.19. I believe Wet Seal could be a good pick below $1.19 based on the intensive insider buying.

Disclosure: I am long WTSL. 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.