Rally Software: 3 Different Insiders Have Purchased Shares This Month

| About: Rally Software (RALY)

Summary

3 insiders purchased Rally stock within one month.

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

2 of these 3 insiders increased their holdings by more than 10%.

Rally Software Development Corp. (NYSE:RALY) provides cloud-based solutions for managing Agile software development activities worldwide.

Click to enlarge

Insider buying during the last 30 days

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

Name Title Trade Date Shares Purchased Current Ownership Increase In Shares
Timothy Miller CEO June 12 30,000 565,893 shares +5.6%
Thomas Bogan Director June 12 50,000 119,060
shares
+72.4%
Timothy Wolf Director June 12 5,000 35,527
shares
+16.4%
Click to enlarge

There have been 85,000 shares purchased by insiders during the last 30 days.

Insider buying by calendar month

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

Month Insider buying / shares Insider selling / shares
June 2014 85,000 0
May 2014 0 0
April 2014 0 0
March 2014 0 0
February 2014 0 0
January 2014 0 0
December 2013 0 12,000
November 2013 0 0
October 2013 0 0
September 2013 0 0
August 2013 0 0
July 2013 0 4,485,156
June 2013 0 2,199
May 2013 0 0
April 2013 55,500 0
Click to enlarge

There have been 140,500 shares purchased and there have been 4,499,355 shares sold by insiders since April 2013. The month of June 2014 has seen the most insider buying. Rally had its IPO in April 2013.

Financials

Rally reported the fiscal 2015 first-quarter, which ended April 30, financial results on June 5 with the following highlights:

Revenue $19.4 million
GAAP net loss $8.5 million
Cash $85.7 million
Net cash $3.45 per share
Click to enlarge

The stock plunged after these results and the three insiders purchased their shares after the plunge.

Click to enlarge

(Source: Investor presentation)

Outlook

Rally's guidance is as follows:

Q2/15 FY2015
Revenue $20.2-$20.8 million $87.0-$90.0 million
Non-GAAP EPS -$0.39 to -$0.42 -$1.31 to -$1.36
Click to enlarge

Click to enlarge

(Source: Investor presentation)

Competition

Rally's competitors include Hewlett-Packard (NYSE:HPQ), International Business Machines (NYSE:IBM), and Microsoft (NASDAQ:MSFT). Here is a table comparing these companies.

Company RALY HPQ IBM MSFT
Market Cap: 270.10M 65.17B 184.65B 343.39B
Employees: 494 317,500 431,212 99,000
Qtrly Rev Growth (yoy): 0.21 -0.01 -0.04 -0.00
Revenue: 77.71M 111.82B 98.83B 83.35B
Gross Margin: 0.76 0.24 0.49 0.70
EBITDA: -18.66M 13.11B 25.15B 32.13B
Operating Margin: -0.28 0.08 0.21 0.34
Net Income: -22.82M 5.50B 15.84B 22.43B
EPS: -0.93 2.84 14.63 2.67
P/E: N/A 12.26 12.47 15.58
PEG (5 yr expected): -0.29 2.07 1.17 2.25
P/S: 3.10 0.59 1.87 4.09
Click to enlarge

Rally has the fastest revenue growth among these four companies.

Here is a table of these competitors' insider activities during the last three months.

Company Insider buying / shares Insider selling / shares
HPQ 0 96,984
IBM 0 33,432
MSFT 2,950,501 20,056,000
Click to enlarge

Only Rally has seen intensive insider buying during the last 30 days.

Conclusion

There have been three different insiders buying Rally and there have not been any insiders selling Rally during the last 30 days. Two of these three insiders increased their holdings by more than 10%. Rally has an insider ownership of 3.00%.

The three insiders purchased their shares at prices ranging from $9.15 to $9.21. I believe Rally could be a good pick below $9.21 based on the intensive insider buying.

Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in RALY over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.