Top-level insiders have a deeper insight into their own company’s operations than any outside analyst or investor could ever hope to obtain. They represent the smart money which means that if they’re buying stock, it’s worth taking note.
Here, we are going to highlight an insider transaction at Hibbett Inc (HIBB:US). Hibbett is a US fashion retailer that is focused on athletic-inspired merchandise. It operates 1,071 stores in 35 states through the Hibbett Sports and City Gear chains, as well as selling its products online. It’s traded on the Nasdaq Stock Exchange and currently has a market capitalization of $1.34 billion.
Hibbett Inc: Insider Buying
Form 4 filings show that on 28 June, Senior Vice President of Operations, Benjamin Knighten, purchased 1,250 HIBB shares at a price of $81.00 per share. This purchase cost the insider approximately $100,000 and increased his holding by around 23%.
Our data shows us that this was the first insider buy order at Hibbett for over a year. This is noteworthy. The fact that the insider has increased his stake by over 20% suggests he is confident the stock is undervalued right now.
Mr. Knighten is likely to have a very good knowledge of the inner workings of the business. From November 2006 to July 2018 he was Vice President of Store Operations and then he was Chief Operating Officer of City Gear from July 2018, for nearly two years before taking up his current role.
Record Quarterly Sales
Hibbett has bounced back from Covid-19 and produced record quarterly sales and earnings. Net sales for the 13-week period ended 1 May, 2021 came in at $506.9 million, an increase of 87.8% compared to the same period in 2020. Bricks and mortar comparable sales were up 113.5% and online was 1% higher compared to the prior year. Online sales were still 105% higher than the same period two years ago, pre-Covid-19. The gross margin on net sales was an impressive 41.4% versus 27.5% in the same 13 weeks last year. Net income was $84.8 million for the period, with earnings per diluted share of $5.00. The company reported a net loss of $15.3 million in the same period last fiscal year. The company finished the quarter in a strong financial position with cash and cash equivalents of $270.9 million.
“Our Fiscal 2022 is off to an excellent start as our business continues to build on the strong momentum we experienced last year. Record quarterly sales and earnings were a result of our continued commitment to offering a compelling assortment of merchandise combined with our trademark superior customer service and a best-in-class omni-channel platform,” said Mike Longo, President and Chief Executive Officer.
On the back of very strong Q1 numbers we see the recent insider purchase at Hibbett as bullish. It signals that the insider believes there is further growth at the company to come and that the shares remain undervalued by the market.