Top-level corporate insiders such as CEOs and CFOs tend to have the most up-to-date information on their businesses. If they’re buying company stock, it’s generally a sign that the outlook for the stock is favorable.
In this report, we are going to highlight some buying activity from top-tier insiders at Kingfisher PLC (KGF:LN). Kingfisher is a multinational home improvement retailer that trades under a number of brand names across Europe and the UK including B&Q, Brico Depot, Castorama, TradePoint, and Screwfix. The company operates approximately 1,400 stores and also has online operations. It’s listed on the London Stock Exchange and currently has a market capitalization of £7.1 billion.
Kingfisher: Insider Buying
Our records show that on October 18, two C-Suite executives at Kingfisher bought stock. CEO Thierry Garnier picked up 40,000 shares at a price of £3.27 per share while CFO Bernard Bot purchased 30,000 shares at the same price. In total, these insiders spent £229,000 on Kingfisher stock.
This trading activity is worth highlighting due to the fact that the purchases have increased the size of the insiders’ holdings significantly. Garnier’s purchase of 40,000 shares has increased the size of his holding by 67% while Bot’s purchase has boosted the size of his position by 60%. This suggests that the insiders are very confident the stock is set to move higher.
It’s worth noting that Garnier and Bot aren’t the only top-level insiders here to purchase stock recently. Back in June, we observed a large purchase from Chairman Andrew Cosslett. Clearly, there’s a consensus of opinion at the top of the company that the stock is undervalued right now.
Supportive Growth Trends
Kingfisher recently posted a strong set of H1 results.
For the six months ended July 31, 2021, sales amounted to £7,101 million, up 20% year on year while operating profit was £747 million, up 54% year on year. Adjusted basic earnings per share for the period were 24.9p, up 65% on H1 2020.
On the back of these results, the company increased its interim dividend by 38.2% to 3.8p per share.
"We have had a very strong first half of the year, with growth across all our categories and channels, particularly e-commerce. This is a testament to the rapid progress being made against our strategic priorities which continue to drive customer engagement and an improved competitive position in our key markets,” commented Mr. Garnier.
Looking ahead, management was confident about the future, stating that supportive market trends provide an opportunity for sustained growth. "Our industry is benefiting from new trends that we believe will be supportive over the long term. These include people spending more time working from home, the emergence of a new generation of DIY'ers, the need for greener homes, and a strong housing market. Kingfisher is well placed to capitalize on these trends and deliver sustained outperformance," said Mr. Garnier.
In light of this confident tone from management, and the large increase in the dividend, we see the insider buying here as a bullish indicator.