Corporate insiders have deep insight into their companies’ operations and future prospects. If these individuals are buying company stock, investors should take note.
In this report, we are going to highlight a large insider purchase at Lowe’s Companies Inc (LOW:US). Lowe’s is a home improvement company that operates over 2,000 stores across North America. The company is listed on the New York Stock Exchange and currently has a market capitalization of $116 billion.
Lowe’s Companies Inc: Insider Buying
Our data shows that on 26 February, board member David Batchelder bought 6,250 LOW shares at a price of $159.48 per share. This purchase cost the insider $996,750.
Large Insider Trade
This insider trade stands out for two reasons. Firstly, it’s a substantial trade, both in nominal and relative terms. Our records show that it has increased the size of Batchelder’s holding by 28%. This suggests that the insider is confident the stock is undervalued right now.
Secondly, Mr. Batchelder has significant investment management experience. Previously, he was a founder, principal and member of the investment committee at Relational Investors, which managed over $6.5 billion for some of the largest pension funds in the world, from 1996 to 2015. Overall, he has more than 30 years of financial management and mergers and acquisitions experience. This experience in the financial world means this trade is more informative.
Strong Q4 Results
Lowe's posted a strong set of fourth-quarter results in late February. For the quarter, total sales were $20.3 billion compared to $16.0 billion in the fourth quarter of 2019, with comparable sales up 28.1%. Meanwhile, adjusted diluted EPS came in at $1.33, up 41.5% on the $0.94 posted in the fourth quarter of 2019. During the quarter, the company repurchased 21.1 million shares at a cost of $3.4 billion while also paying $452 million in dividends.
"Strong execution enabled us to meet broad-based demand driven by the continued consumer focus on the home, with growth over 16% in all merchandising departments, over 19% across all U.S. regions and 121% on Lowes.com,” commented President and CEO Marvin R. Ellison.
Looking ahead to 2021, the company said that it expects to grow market share and drive further operating margin expansion.
In light of these strong results, we see the insider buying here as a bullish signal.