Leonardo SpA (LDO:IM)
12-month performance: -53%
Insider activity: Bullish
Insider buying pattern: Large purchase from CEO
Recent news: Solid H1 results
Top-level corporate executives tend to have a deep level of insight into their own companies. If these insiders are buying company stock, it can be a sign that the stock is undervalued.
Here, we are going to highlight a recent insider purchase at Leonardo Spa (LDO:IM). Leonardo is an Italian company that operates in the aerospace, defense, and security industries. It is listed on the Borsa Italiana and currently has a market capitalization of €2.9 billion.
Leonardo Spa: insider buying
An analysis of insider transaction activity here reveals that on 23 September, Leonardo’s CEO Alessandro Profumo purchased 100,000 shares in the company at a price of €5.04 per share. The total cost of the transaction was €504,000.
Source: 2iQ Research
Large CEO purchase
This insider purchase is significant for several reasons. Firstly, it is a large purchase, both in nominal and relative terms. This purchase has lifted the insider’s holding from 114,903 shares to 214,903 shares – an increase of 87%.
Secondly, our records show that Profumo doesn’t purchase LDO shares very often. The last time Profumo purchased shares was in January 2018. This indicates the stock could be worth a closer look right now.
Operational resilienceLeonardo Spa’s share price has fallen significantly in 2020. Year to date, the stock is down over 50%.
However, first-half results, issued in late July, weren’t terrible. Due to the company’s focus on government/military projects, revenue was only down 1.4% for the period. Meanwhile, the order backlog only fell 1.1%.
“The first half results showed that we have remained resilient in the face of extreme market conditions, with a strong military/governmental domestic commercial performance,” said CEO Alessandro Profumo. “The medium-long term fundamentals of our business remain unchanged” he added.
Putting this all together, the large recent purchase from Profumo suggests that he sees the stock as undervalued at present. We see this insider purchase as a bullish signal.