Top-level corporate executives tend to have a good understanding of how their companies are performing. If these insiders are buying company stock, it’s often a sign that business performance is strong and that the outlook for the stock is attractive.
In this report, we are going to highlight some buying from top-tier insiders at Hibbett Inc (HIBB:US). Hibbett is a US clothing retailer that is focused on athletic attire. Headquartered in Birmingham, Alabama, it operates nearly 1,100 stores across 35 US states through the Hibbett Sports and City Gear chains, and also sells its products online. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $1.14 billion.
Hibbett Inc: Insider Buying
Our data shows that there have been two large buys from top-level insiders at Hibbett in recent weeks.
On 24 September, Senior Vice President and General Counsel David Benck picked up 2,000 shares at a price of $74.34 per share, spending $149,000 on stock.
More recently, on 6 October, President and CEO Michael Longo snapped up 5,000 shares at a price of $70.08 per share, spending $350,000 on the stock.
Combined, these two insiders spent just under $500,000 on Hibbett stock.
High Trading IQ
There are a couple of things that stand out about this insider trading activity. The first is that President and CEO Michael Longo has an excellent trading track record. Our model gives the insider a long-term Trading IQ of 138, which indicates that his past purchases and sales have been timed very well.
The second is that General Counsel David Benck has increased the size of his holding by 25%. Typically, GCs tend to be quite risk averse. The fact that Mr. Benck has spent nearly $150,000 on stock and boosted his holding significantly suggests that he is very confident the stock is set to move higher.
Full-year Guidance Raised
Hibbett’s most recent results, for the quarter to 31 July, were strong.
While net sales for the quarter were down 5.1% year on year to $419.3 million (they were up 66.1% on Q2 2019 sales), gross margin was up 2% year on year to 39%, boosted by higher sell through of premium-priced products, a low promotional environment, and improved profitability of e-commerce sales. Quarterly earnings per share came in at $2.86, well above the consensus forecast of $1.44 per share.
“Our current year second-quarter results were strong and compare favorably to the prior year second quarter that experienced a significant boost from market disruption, pent up demand, and the first round of stimulus payments. We believe our significant revenue growth and profitability over the previous two years ago demonstrates that our strategy of delivering a compelling assortment of highly coveted merchandise coupled with superior customer service and a best-in-class omni-channel platform will continue to drive strong top and bottom line performance,” commented Mr. Longo.
On the back of these results, the company raised its full-year guidance. It now expects sales growth in the mid-tens, compared to previous guidance of high-single digits to low-double digits. It also now expects diluted EPS of $11 to $11.50, compared to previous guidance of $8.50 to $9.00.
In light of this performance, we see the insider buying here as a bullish indicator.