Insider buying can provide valuable clues about a stock’s potential. Insiders sell company stock for a number of reasons. But they only buy stock for one reason – they expect it to go up.
In this report, we are going to highlight a bullish pattern of insider buying at Bed Bath & Beyond Inc (BBBY:US). Bed Bath & Beyond is a US retailer that sells a range of domestic merchandise and home furnishings. It operates through both stores and websites. It is listed on the NASDAQ Global Select Market and currently has a market capitalization of $2.5 billion.
Bed Bath & Beyond: insider buying
Form 4 filings show that this month, two insiders at Bed Bath & Beyond have purchased stock. Those who have bought stock include:
- Chair Harriet Edelman, who purchased 7,500 shares at $19.94 per share
- Director Joshua Schechter, who purchased 4,500 shares at an average of $20.11 per share
Combined, these insiders have spent around $240,000 on BBBY stock.
This insider buying is worth highlighting for a few reasons. Firstly, these are large purchases in relative terms. Edelman’s purchase has increased the size of her holding by 37%. Meanwhile, Schechter’s holding has increased the size of his holding by 27%. This suggests that these insiders are quite confident that the stock is undervalued right now.
Secondly, this is the second time since mid-July that multiple insiders have purchased BBBY stock. Our Insider Model views this buying activity as bullish.
Bed Bath & Beyond’s financial performance has been boosted by strong online demand for home furnishing and decor and as a result, it recently posted a surprise quarterly profit and its first comparable sales growth in nearly four years.
For the second quarter ended 29 August, same-store sales jumped 6% – compared with a 1.78% drop estimated by analysts – helped by an 89% surge in online sales. Meanwhile, adjusted EBITDA increased 36% on the same period last year to $199 million.
As a result of the strong performance, analysts at JP Morgan raised their target price from $21 to $28 – 40% higher than the current share price.
In light of these developments, we see the insider buying here as a bullish signal.