Corporate insiders tend to have the most up-to-date information on their companies’ performance and operations. If these individuals are buying company stock, it’s often a sign that performance is strong and that the outlook for the stock is favorable.
In this report, we are going to highlight some insider buying at Bed Bath & Beyond Inc (BBBY:US). Bed Bath & Beyond is a US retailer that sells a range of domestics 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 $3.0 billion.
Bed Bath & Beyond: Insider Buying
Our records show that on 16 April, two insiders at Bed Bath & Beyond bought stock. CFO Gustavo Arnal bought 20,000 shares, spending $509,000 on stock, while board member Johsua Schechter bought 3,000 shares, spending $75,000 on the stock.
Informative Transactions
This insider activity stands out for two key reasons. Firstly, these purchases represent the largest amount of insider buying at BBBY within a quarter for several years. This indicates that these insiders see value in the stock right now.
Secondly, the CFO has made a substantial purchase. CFO purchases can be extremely informative insider transactions. These insiders have considerable insights into their firms’ performance and financial health and some studies have found that they earn higher abnormal returns following their purchases of company stock than CEOs.
Transformation Progress
Since we last covered Bed Bath & Beyond in November 2020, the company has continued to execute its transformation plan. Indeed, in the fourth quarter of 2020, the group delivered its third consecutive quarter of comparable sales and profit growth with sales up 4% to $2.6 billion and net income coming in at $9 million, versus a loss of $65 million in the same period last year.
Looking ahead, BBBY expects 2021 to be a year of “fast-paced transformation that is expected to enhance the strategic position for sustained success.” It is expecting adjusted EBITDA to be in the range of $500 - $525 million (versus $168 million in Q4) and as a result, it plans to increase fiscal 2021 share repurchases to $325 million from $300 million. It has advised that it has continued to see positive net sales trends in early fiscal 2021.
"We are excited to start fresh in 2021 with our sharpened size and scale, a healthier portfolio of core banners, and a stronger financial position to execute the first phase of our 3-year transformation journey,” said CEO Mark Tritton.
In light of the progress the company is making, we see insider buying here as bullish.
