If a CFO is buying company stock, it’s often worth investigating the stock further. CFOs tend to have a detailed understanding of their firms’ financials and some studies have found that these insiders earn higher abnormal returns following their purchases of company shares than CEOs.
In this report, we are going to highlight an interesting CFO purchase at Energizer Holdings Inc (ENR:US). Energizer Holdings is one of the world's largest manufacturers of batteries. Its product portfolio includes Energizer brand batteries as well as auto care products such as Armor All and Nu Finish. The company is listed on the New York Stock Exchange and currently has a market capitalization of $2.8 billion.
Energizer Holdings Inc: Insider Buying
Our insider transaction data shows that on 11 August, CFO Timothy Gorman bought 5,875 ENR shares at a price of $40.89 per share. This purchase – which cost the insider around $240,000 – increased his holding to 86,462 shares.
Insider Trading Skill
This insider purchase is worth highlighting for a couple of reasons. Firstly, it is substantial in size. The fact that Mr. Gorman has spent nearly a quarter of a million dollars on company stock suggests that he is confident the stock is set to rise.
Secondly, Mr. Gorman has a very good track record when it comes to timing his purchases and sales well. In recent years, he has bought low and sold high on a number of occasions. Our model gives the insider a short-term Trading IQ of a very high 115.
Sales Guidance Increased
Energizer posted a solid set of Q3 results earlier this month.
For the quarter, net sales amounted to $721.8 million, up 9.7% year on year, with organic growth of 5.8%. Meanwhile, adjusted earnings per share came in at $0.74, up 48% year on year.
"In our third quarter, we delivered nearly 10% net sales growth and nearly 50% adjusted earnings per share growth behind strong auto care results, solid execution across our business, and the benefits of synergies and reduced interest expense," commented CEO Mark Lavigne.
On the back of these results, Energizer increased its guidance for full-year net sales. It now expects net sales growth of 8% to 9% versus previous guidance of 5% to 7%. It also said that it intends to enter into a $75 million accelerated share repurchase program in the fourth fiscal quarter.
“The strength of our brands, the breadth of our portfolio, and the resilience of this organization in the face of the continuing pandemic position us well for success as we look forward," said Mr. Lavigne.
In light of these developments, we see the insider buying here as a bullish indicator.