Insider buying can provide valuable trading signals. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.
In this report, we are going to highlight some interesting insider buying at The Coca-Cola Company (KO:US). Coca-Cola is one of the world’s most dominant non-alcoholic beverage companies. Its brands include Coca-Cola, Sprite, Fanta, Powerade, and Minute Maid. The company is listed on the New York Stock Exchange and currently has a market cap of $253.8 billion.
Insider buying at Coca-Cola
Our data shows that on October 28, board member Herb Allen purchased 33,200 KO shares for his company, Allen & Company, at a price of $60.18 per share. This trade cost the insider around $2.0 million and took his total direct and indirect holding to 261,664 shares.
Mr. Allen is likely to have a good understanding of Coca-Cola’s intrinsic value. Since 2002, he has served as President of Allen & Company, a privately-held investment banking firm based in New York. Prior to Allen & Company, he held positions with T. Rowe Price and Botts & Co. Ltd.
What stands out here is that the trade has boosted Allen & Company’s Coca-Cola holding by approximately 50%. This suggests that Mr. Allen is quite confident the stock is going higher.
Full-year guidance raised
Coca-Cola recently published a solid set of Q3 results.
For the period, net revenues grew 10% year on year to $11.1 billion (versus analysts’ forecast of $10.52 billion), with organic revenues (non-GAAP) up 16%. Meanwhile, adjusted non-GAAP earnings per share were up 7% to $0.69, comfortably ahead of the consensus forecast of $0.64. Comparable operating margin (non-GAAP) was 29.5% versus 30.0% in the prior year.
“Our business is resilient amidst a dynamic operating and macroeconomic environment. We are investing in our strong portfolio of brands, which is a cornerstone of our ability to deliver long-term value for our stakeholders,” said James Quincey, Chairman and CEO.
On the back of this performance, the company raised its revenue and profit guidance for 2022. It now expects revenue growth of 14-15% versus 12-13% previously, and EPS growth of 6-7% versus prior guidance of 5-6%.
In light of this update, we see the insider buying here as a bullish indicator.