Top-level company insiders tend to have the most up-to-date information on the company they work for. If they’re buying stock, it’s generally a bullish development.
Here, we are going to highlight insider trades at Applus Services SA (APPS:SM). Applus Services is focused on the testing, inspection and certificating sectors and operates in over 70 countries. The company is split into four divisions: Automotive, Energy and Industry, Laboratories and its IDIADA division which provides engineering services and other services such as ground proofing. It’s listed on the Madrid Stock Exchange and currently has a market capitalization of €1.2 billion.
Applus Services SA: Insider Buying
Our data shows that several insiders at Applus have made stock purchases recently.
On 20 August, CEO Fernando Basabe purchased 25,000 APPS shares at a price of €7.75 per share. This purchase cost Basabe approximately €200,000 and increased his holding in the company by over 100%.
On 19 August, Christopher Cole, the Independent Chairman of the Board, bought 5,000 APS shares at a price of €7.75 per share. This purchase cost Cole just under €40,000 and upped his holding by 50%.
And on 18 August, CFO Juan Amigo bought 6,400 APPS shares at a price of €7.82 per share. This cost the insider around €50,000 and increased his holding by just under 20%.
This insider buying activity stands out as several top-level insiders have bought stock within a short timeframe. When key insiders such as a CEO and CFO buy stock simultaneously, it tells us that confidence amongst senior management is high. It’s worth noting that our data shows that there was a cluster of insider buying at the company in May and the share price is up by over 30% since.
Additionally, the CEO has invested a significant amount of money into Applus and has raised his holding by over 100%. This suggests he is very confident in his company’s future prospects. The Independent Chairman of the Board has increased his holding by 50% and the CFO by close to 20% which is a sign that they too are confident the share price will rise in the future.
Applus Services was heavily hit by the Covid-19 pandemic but its latest H1 results suggested that the business is firmly back on track. Revenue of €843 million was an increase of 13.7% on H1 2020 and the operating profit margin of 9.5% was double that of the year prior. Reported net profit of €14.7 million was a big improvement on the €169.9 million loss in the first half of last year. The net debt/EBITDA ratio of 2.7x was manageable and liquidity available was €585 million at the end of the half. The company advised that it expects the recovery to continue and for the numbers to reach pre-pandemic levels next year.
“The business has achieved a strong recovery in this second quarter and first half, when compared to the equivalent period last year that was significantly affected by coronavirus, also delivering good quarter on quarter sequential growth. This encouraging overall increase in revenue and profit is across most business lines,” said CEO Fernando Basabe.
Having assessed these reassuring H1 numbers, we see the recent insider buying as bullish. The cluster buying suggests there is a high level of confidence in the business at the very top. In raising their holdings by significant percentages these top-level insiders are indicating they expect the share price to go up in the future.