If a top-level insider such as a CEO or Chairman is buying company stock, it’s often worth taking a closer look. These insiders tend to have an intimate understanding of their businesses and are often way ahead of analysts when it comes to revenue and earnings trends.
In this report, we are going to highlight a purchase from a top-level insider at JD Sports Fashion PLC (JD/:LN). JD Sports Fashion is a UK retailer that specializes in athletic footwear and athleisure wear. The company operates in over 20 countries worldwide, selling its products both in stores and online. It is listed on the London Stock Exchange and currently has a market capitalization of £9.6 billion.
JD Sports Fashion: Insider Buying
Our data shows that on 19 July, JD Sports’ Chairman and CEO Peter Cowgill bought 50,000 shares at a price of £8.57 per share. This trade cost the insider approximately £431,000.
A Top-tier Insider
This trade is worth highlighting for a number of reasons. Firstly, this is Cowgill’s first purchase for around two years. His last two transactions were sales. This suggests that the insider sees a lot of value in the stock at present.
Secondly, Cowgill has a good trading track record. Our model gives the insider a short-term trading IQ of 114 and a long-term trading IQ of 107. These figures indicate that the insider has made well-timed purchases and sales in the past.
Third, Cowgill has been Executive Chairman of JD Sports since 2004. During his time in the role, the company has expanded internationally and seen a huge rise in its revenues. Given his background, it’s fair to assume that he has a good read on the company’s performance and prospects.
In early July, JD Sports posted an encouraging trading statement. The group advised that in the UK, trading in the immediate period after reopening was “particularly encouraging” as consumers, seeking to refresh their wardrobes after lockdowns, reacted positively to the company’s innovative and exciting product mix.
Meanwhile, JD said that in the US, it had seen “enhanced levels of consumer demand” across all of its businesses on the back of the fiscal stimulus paid directly to individuals. It added that the JD fascia continues to make “positive progress” in the US with 60 stores trading following the opening of five new stores and the conversion of a further six stores which previously traded as Finish Line.
For the year ending 30 January 2022, JD advised that it expects to generate profit before tax and exceptional items of no less than £550 million. That would represent an increase of 31% on the figure of £421.3 million posted in the last financial year.
In light of this update, we see the insider buying here as a bullish indicator.