If insiders are spending hundreds of thousands of dollars on company stock, it’s often worth taking a closer look. Insiders tend to have a superior level of information on their companies, and often use this information edge to their advantage.
In this report, we are going to highlight some interesting insider buying at Autozone Inc (AZO:US). Autozone is a US retailer and distributor of automotive replacement parts and accessories. Founded in 1979, it currently operates in 50 US states, as well as in Puerto Rico, Mexico, and Brazil. The company is listed on the New York Stock Exchange and has a market capitalization of $40.97 billion at present.
Autozone Inc: Insider Buying
Our data shows that on March 17, Autozone’s Chief Information Officer Michelle Borninkhof purchased 259 shares at a price of $1,944.66 per share. This trade cost the insider approximately $503,700.
Bullish Trading Activity
This trading activity is worth highlighting for a couple of reasons. Firstly, this is Ms. Borninkhof’s first purchase of stock since she joined the company in May 2021. This indicates she sees value in the stock at present.
Secondly, Ms. Borninkhof is not the only insider to make a large purchase here recently. Our records show that on March 3, board member Brian Hannasch also spent around $500,000 on AZO stock. The fact that two insiders have made large purchases within a month is bullish, in our view.
Autozone’s Q2 fiscal 2021 results, posted in early March, showed that the company has momentum right now.
For the 12 weeks ended February 12, 2022, net sales amounted to $3.4 billion, an increase of 15.8% from the second quarter of fiscal 2021. Meanwhile, net income for the quarter increased 36.4% over the same period last year to $471.8 million, while diluted earnings per share increased 49.4% to $22.30 from $14.93 in Q2 2020. Both revenue and earnings topped analysts’ estimates.
“Our second quarter’s results are a reflection of our AutoZoners’ continued commitment to delivering exceptional service to our customers during these unique times,” commented Bill Rhodes, Chairman, President and CEO. “We believe the initiatives we have in place position us well for the remainder of our fiscal year,” he added.
Since the results, Autozone has authorized an additional stock repurchase. It will now repurchase another $2.0 billion worth of stock on top of its ongoing share repurchase program.
“AutoZone’s continued strong financial performance allows us to grow our business, return meaningful amounts of cash to our shareholders and maintain our investment grade credit ratings,” said CFO Jamere Jackson after the stock repurchase announcement.
In light of the good results here, we see the insider buying as a bullish indicator.