Insider buying can provide clues about a stock’s next move. Insiders sell company stock for a number of reasons but they only purchase stock for one reason – they expect it to rise.
In this report, we are going to highlight a large insider purchase at Conagra Brands Inc (CAG:US). Conagra Brands is an American consumer packaged goods food company. Its brands include Birds Eye, Slim Jim, Healthy Choice, and Banquet. The company is listed on the New York Stock Exchange and currently has a market capitalization of $16.7 billion.
Conagra Brands Inc: Insider Buying
Our insider transaction data shows that on 15 July, Chairman Richard Lenny bought 10,000 CAG shares at a price of $34.14 per share. This purchase, which cost the insider $341,400, increased his holding to 128,261 shares.
Significant Industry Experience
This trade is worth highlighting due to the fact that Lenny’s last purchase was timed quite well. Back in January, Lenny purchased 10,000 shares at a price of $33.70 per share. Since then, the stock has traded as high as $39.09.
It’s worth noting that Mr. Lenny – who joined the Conagra board in 2009 – has a wealth of experience in the consumer goods industry. Previously, he was Chairman and CEO of The Hershey Company. He also previously served as Group Vice President at Kraft Foods. So, he is likely to have a good read on the industry and his company’s prospects.
14% Increase in Dividend
Conagra’s recent fourth-quarter results were underwhelming due to the surge in at-home food consumption in the same quarter in 2020 during the pandemic. For the period, net sales were down 16.7% year on year with organic net sales down 10.1%. Adjusted earnings per share were down 28% to $0.54.
However, on a two-year compounded annualized basis, the results were actually quite solid. On this basis, fiscal 2021 organic net sales increased 4.5% while adjusted EPS increased 22.5%.
What stood out about the Q4 results was that the company lifted the annual dividend by 14%, after increasing it 29% last year. This dividend increase suggests that management is confident about the future.
In relation to the dividend, Conagra’s President and CEO Sean Connolly said: “The underlying strength of our business and our continued investments to further support our brands gives me confidence that we have a long runway of growth and shareholder value creation ahead of us. This confidence is underscored by our Board of Directors' decision to increase our annual dividend by 14% after increasing it 29% last fiscal year."
In light of this dividend increase, we see the insider buying here as a bullish indicator.