Corporate insiders such as CEOs, CFOs, and COOs tend to have the most in-depth and up-to-date information on their companies. If they’re buying company stock, it’s often worth taking a closer look.
In this report, we are going to highlight some interesting insider buying at GEA Group AG (G1A:GR). GEA Group is a technology company that offers solutions to the food processing industry. A global operator, it provides technologies, components and sustainable solutions for sophisticated production processes. The company is listed on Deutsche Börse’s Xetra and currently has a market capitalization of €6.4 billion.
GEA Group: Insider Buying
Our records show that on 6 April, two insiders at GEA Group bought stock. The first was CFO Marcus Ketter, who purchased 2,784 shares at a price of €35.62, spending €99,166 on stock. The second was COO Johannes Giloth, who bought 2,330 shares at a price of €35.62, spending €82,995 on stock.
This insider activity stands out for two reasons. Firstly, these are both top-tier insiders. Mr. Ketter has been a member of the Executive Board since May 2019 and is responsible for corporate finance, corporate accounting, internal audit, mergers & acquisitions, and global process management. All divisional CFOs report to him. Mr. Giloth has been a member of the Executive Board and COO since January 2020. He is responsible for the company’s worldwide purchasing activities, global production and supply chain. These insiders are likely to have an in-depth understanding of GEA and its prospects.
Secondly, insider purchases at GEA Group are not very common. Our data shows that in the last two years, there have been only four buys from insiders. This suggests that these insiders see value in the stock right now.
GEA delivered a resilient performance in 2020. During the year, both order intake (-2.2%) and revenue (-2.6%) declined only slightly. Meanwhile, EBITDA before restructuring measures (+11%) and return on capital employed (+10.6%) both increased substantially. As a result of this performance, and an increase in liquidity, the group proposed a stable dividend of €0.85 per share to its shareholders.
Looking ahead, GEA said that it expects to see an increase in revenue and earnings in the near term. For fiscal year 2021, the group expects organic growth in revenue, EBITDA before restructuring measures of between €530 million and €580 million (versus €530 million in 2019) and return on capital employed of between 16 and 20 percent. It also lifted its mid-term financial targets.
“We look towards the future with optimism. The measures we have taken are delivering results and our business model has proved stable, even during a global pandemic. This year, rather than resting on our laurels, we will continue to push ahead systematically. We are confident in GEA’s continued growth potential which is why our mid-term 2022 financial targets are even more ambitious,” said CEO Stefan Klebert.
In light of this outlook, we see the insider buying here as bullish.