Insider buying can provide investors with insight into the sentiment at the heart of a company. An insider may sell stock for a number of reasons. But they only buy stock for one reason – they expect it to go up.
Here, we are going to highlight insider buying at Genuine Parts Company (GPC:US). Genuine Parts Company distributes automotive and industrial replacement parts. Using a network of 10,000 hubs, the company supplies clients across 14 different countries. It’s traded on the New York Stock Exchange and currently has a market capitalization of $17.5 billion.
Genuine Parts Company: Insider Buying
Regulatory filings show that on 13 August, an Independent Director at Genuine Parts Company, John Holder, purchased 2,000 GPC shares at a price of $124.93 per share. This purchase cost the insider approximately $250,000 and increased his holding in the company by around 13%.
First Insider Buying of 2021
This insider transaction is interesting as Mr. Holder has demonstrated the ability to pick his trading levels well in the past. Last December, for example, he bought shares at a level around 25% lower than the current share price. His recent trade represents his largest-ever purchase at Genuine Parts Co.
It’s worth noting that Mr. Holder is a very experienced professional who has a wealth of top-level experience. He is currently Chairman and CEO of Holder Properties and also serves on the Board at Oxford Industries and SunTrust Bank’s Atlanta region.
Impressive Revenue Growth in H2 Numbers
Genuine Parts Company released an impressive set of second-quarter results.
Revenues increased by 25.1% to $4.8 billion for the quarter ending 30 June with sales improving in the automotive and industrial divisions. This was ahead of market expectations and led to upgrades for the full year. The adjusted diluted EPS figure from continuing operations of $1.74 was a record number. The free cash flow came in at $614.4 million and led to the expected full-year number rising from around $700 million-900 million to $900 million $1.1 billion. The company had $2.5 billion of total liquidity available at the end of the quarter.
"Our exceptional balance sheet provides us with the financial flexibility to pursue strategic growth opportunities via investments in organic and acquisitive growth, while also returning capital to shareholders through the dividend and share repurchases. The GPC team is focused on executing our growth strategy and operational initiatives to further enhance our financial performance in the remainder of 2021 and beyond," said Paul Donahue, Chairman and CEO of Genuine Parts Company.
Having reflected upon this strong Q2 update, we see this insider trading as very positive. It sends a signal to investors that the Independent Director believes that the shares remain good value and the share price has further to run.