Corporate insiders know their companies more intimately than anyone else. They also have access to real-time information that outsiders do not have access to. If these individuals are buying company stock, it’s generally a positive development.
In this report, we are going to highlight some interesting insider buying at Dassault Systèmes (DSY:FP). Dassault is a French software company that specializes in three-dimensional (3D) solutions. Its key product, 3DEXPERIENCE, is a business experience platform that is used by businesses in a broad range of industries including aerospace and defense, transportation, life sciences, energy and materials, consumer goods, retail, and construction. The company is listed on the Euronext Paris stock exchange and currently has a market capitalization of €64.0 billion.
Dassault Systèmes: Insider Buying
Our insider transaction data shows that between 7 September and 8 September, board member Catherine Dassault bought 68,715 shares at an average price of €48.81 per share. In total, the insider spent €3.35 million on DSY stock. This trading activity increased her holding from 71,435 shares to 140,150 shares.
This insider transaction activity is worth highlighting for two main reasons. Firstly, this is a high-conviction purchase. Not only is it substantial in nominal terms but it is also substantial in relative terms as it has increased the size of her position by 96%.
Secondly, the last trade from this insider was timed very well. On 28 May, Ms. Dassault purchased 10,638 shares at a pre-stock-split price of €37.53 per share. Since then, the stock has risen as high as €49.50, netting the insider a substantial profit.
Full-year Guidance Raised
Dassault Systèmes posted a strong set of second-quarter results in late July.
For the quarter, total group revenue was up 14% to €1.16 billion while 3DEXPERIENCE software revenue increased 26%, with licenses and other software revenue up sharply. Non-IFRS earnings per share were up 45% year on year to €0.22, driven by robust revenue growth and high profitability.
“We delivered strong results in the second quarter driven by robust demand across product lines and geographies,” said CFO Pascal Daloz.
On the back of these results, the company raised its full-year guidance. It now expects full-year revenue growth of 10% to 11% versus previous guidance of 9% to 10% and earnings growth of 23% to 25% versus previous guidance of 17% to 18%.
“We expect the current business environment and profitability trends to persist in the second half. As a result, we are raising our FY 2021 revenue growth objective range,” commented Mr. Daloz.
In light of these strong results, we see the insider buying activity here as a bullish indicator.