Insider buying can provide valuable trading signals to investors. An insider may sell company stock for many reasons. But they only buy stock for one reason – they expect the share price to rise.
Here, we are going to highlight an insider transaction at Bed Bath & Beyond Inc (BBBY:US). Bed Bath & Beyond is a specialty retailer that sells domestic merchandise through stores and also online. As well as focusing on items for people’s homes it also sells products for infants and young children through its buybuy Baby stores, and personal care necessities via its Harmon outlets. The company is listed on the Nasdaq Stock Exchange and currently has a market capitalization of $3.02 billion.
Bed Bath & Beyond Inc: Insider Buying
Form 4 filings show that on 15 July, the Independent Chairman of the Board at Bed Bath & Beyond, Harriet Edelman, purchased 11,000 BBBY shares at a price of $27.47 (26.971) per share. This purchase cost the insider approximately $300,000 and increased her holding by around 30%.
Large Increase in Holding
This trade caught our attention as it is of a high monetary value and Edelman has increased her holding by a significant percentage. The size of the trade suggests that she is confident that the shares are undervalued. Our data shows that the insider bought stock below the $20 level at the end of 2020, which suggests she can pick her trading levels well.
It’s worth noting that Edelman has significant industry experience. She has spent over thirty years within the consumer goods and financial services sectors and previously spent over 25 years at Avon Products where she held many senior roles. She currently sits on the Board of Directors at Assurant Inc and Brinker International Inc.
Strong First Quarter
Bed Bath & Beyond produced Q1 results that surpassed expectations. Both sales and the gross margin were ahead of the market’s expectations. Net sales of $1.954 billion were 49% ahead of Q1 2020 and the core sales growth was 73%. The adjusted gross margin of 34.9% was up from 26.7% in the first quarter of last year. Adjusted EBITDA of $86 million was a big improvement on the loss of $291 million 12 months before.
Looking ahead, the company raised guidance on sales and adjusted EBITDA for Q2 with net sales of $2.04 billion to $2.08 billion expected and adjusted EBITDA of $150 million to $160 million. Its EBITDA guidance for 2021 rose from a range of $500 million to $525 million up to a range of $520 million to $540 million.
"We have started the year in a position of strength and are clearly on track to accomplish our goals. 2021 marks the first year of our three-year transformation following the groundwork we laid in 2020 – a year of historic and necessary change for this organization against the backdrop of unprecedented challenges due to COVID-19. For the first quarter, we delivered our fourth consecutive quarter of comparable sales growth with gross margin expansion exceeding our expectations,” said Mark Tritton, Bed Bath & Beyond’s President and CEO.
On the back of the excellent Q1 results, we see the recent insider trading as bullish. The insider has already proved adept at picking up stock at attractive levels and this latest trade suggests she believes there is further upside in the Bed Bath & Beyond share price.