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

Summary

  • Five insiders sold Lowe's stock within one month.
  • The stock was not purchased by any insiders in the month of intensive selling.
  • All five of these insiders decreased their holdings by more than 10%.

Lowe’'s Companies (NYSE:LOW) operates as a home improvement retailer.

(click to enlarge)

Insider selling during the last 30 days

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

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Marshall Croom CRO April 4 17,305 No 70,226 shares 19.8%
Maureen Ausura CHRO April 2 146,233 No 80,224 shares + 26,666 options 57.8%
Ricky Damron COO March 18 67,949 No 168,909 shares + 26,666 options 25.8%
Robert Niblock CEO March 17-18 80,572 No 565,259 shares 12.5%
Gaither Keener CLO March 10 116,000 No 65,306 shares + 25,000 options 56.2%

There have been 428,059 shares sold by insiders during the last 30 days.

Insider selling by calendar month

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

Month Insider selling / shares Insider buying / shares
April 2014 163,538 0
March 2014 288,521 0
February 2014 0 0
January 2014 0 0
December 2013 89,761 0
November 2013 106,501 0
October 2013 0 0
September 2013 0 0
August 2013 38,334 0
July 2013 0 0
June 2013 0 0
May 2013 197,586 0
April 2013 5,948 0
March 2013 200,461 0
February 2013 820 0
January 2013 23,367 0

There have been 1,114,837 shares sold, and there have been zero shares purchased by insiders since January 2013. The month of March 2014 has seen the most insider selling.

Financials

Lowe's reported the full-year 2013, which ended January 31, financial results on February 26 with the following highlights:

Revenue $53.4 billion
Net income $2.3 billion
Cash $576 million
Debt $10.5 billion

The five insiders sold their shares after these results.

Outlook

Lowe's 2014 guidance is as follows:

Total sales growth ~5%
Comparable sales growth ~4%
EPS $2.60

(Source: Earnings presentation)

Competition

Lowe's competitors include The Home Depot (NYSE:HD). Here is a table comparing these two companies.

Company LOW HD
Market Cap: 47.61B 106.52B
Employees: 167,000 365,000
Qtrly Rev Growth (yoy): 0.06 -0.03
Revenue: 53.42B 78.81B
Gross Margin: 0.35 0.35
EBITDA: 5.77B 10.92B
Operating Margin: 0.08 0.12
Net Income: 2.27B 5.38B
EPS: 2.14 3.76
P/E: 21.84 20.56
PEG (5 yr expected): 1.08 1.06
P/S: 0.89 1.35
Insider Ownership: 0.16% 0.11%

Lowe's is trading at a higher P/E ratio than Home Depot. In Home Depot, there have been 737,860 shares sold and there have been zero shares purchased by insiders this year. Only Lowe's has seen intensive insider selling during the last 30 days.

Conclusion

There have been five different insiders selling Lowe's, and there have not been any insiders buying Lowe's during the last 30 days. All five of these insiders decreased their holdings by more than 10%. Lowe's has an insider ownership of 0.16%.

Before going short Lowe's, I would like to get a bearish confirmation from the Point & Figure chart. The two main reasons for the proposed short entry are a relatively high P/E ratio, and the intensive insider-selling activity.

Source: Lowe's: 5 Different Insiders Have Sold Shares During The Last 30 Days