Insider buying from CEOs can provide investors with valuable insights. Generally speaking, these insiders have an in-depth understanding of their companies and are way ahead of analysts and portfolio managers when it comes to business trends.
In this report, we are going to highlight a large CEO purchase at Container Store Group (TCS:US). Container Store Group is a specialty retailer of storage and organizational products. Founded in 1978 with just one store, it has grown to become the leading specialty retailer of storage and organizational products in the US. It is listed on the New York Stock Exchange and currently has a market capitalization of $649 million.
Container Store Group: Insider Buying
Our insider transaction data shows that on 20 May, Container Store’s CEO Satish Malhotra bought 20,500 shares at a price of $12.25 per share. This purchase cost the insider approximately $251,125.
41% Increase in Holding
This insider purchase is worth highlighting for several reasons. Firstly, it is a large buy in nominal terms. Our data shows that it is the largest insider purchase at TCS for several years. Our Insider Model views the purchase as bullish.
Secondly, this transaction has increased the size of the CEO’s holding by 41% – a substantial increase. This suggests that Malhotra is confident the stock is undervalued at present.
Strong Q4 Results
The Container Store Group posted a very impressive set of fourth-quarter and 2020 fiscal year results on 18 May. For the fourth quarter ended 3 April 2021, consolidated net sales came in at $314.7 million, up 30.4% year on year. Q4 adjusted earnings per diluted share were $0.71, compared to $0.26 in the fourth quarter of fiscal 2019.
Meanwhile, for the year, consolidated net sales were $990.1 million, up 8.1% year on year. Fiscal 2020 adjusted earnings per diluted share were $1.24, compared to $0.30 in fiscal 2019.
Looking ahead, Container Store was optimistic about its prospects. For the first quarter of fiscal 2021, it expects consolidated sales growth of approximately 50% on the first quarter of fiscal 2020.
“As we look to fiscal 2021 and the next chapter for The Container Store, we have developed our strategic priorities and supporting initiatives to make this great company the best version of itself. The addressable market is substantial and our solid foundation, combined with our focused strategic priorities, positions us well to capitalize on the many opportunities we see for our business and our brand,” said Mr. Malhotra.
In light of these strong results, we see the insider buying here as bullish.