Insiders have access to their companies’ latest performance data and often also have a wealth of experience that can help them evaluate their firms’ prospects. If these individuals are buying company stock, it’s generally worth taking a closer look.
In this report, we are going to highlight some interesting insider buying at MGP Ingredients Inc (MGPI:US). MGP is a leading supplier of premium distilled spirits, specialty wheat proteins, and starches. Founded in 1941, it partners with small start-ups and global brands alike to innovate in the food science industry and create some of the finest alcoholic beverages in the world. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $2.1 billion.
MGP Ingredients Inc: Insider Buying
Our data shows that on June 15, board member and largest shareholder Donn Lux bought 5,000 MGPI shares at a price of $93.37 per share. This trade cost the insider $466,844 and increased his holding to 3.955 million shares.
Mr. Lux – who joined the board in June 2021 – has considerable experience in the alcoholic beverages industry. Previously, he served in various leadership roles at Luxco – a leading branded beverage and alcohol company that was acquired by MGP in 2021 – between 1991 and March 2021, including as Chairman and CEO. He also served as Chairman and CEO of Luxco-affiliated companies Limestone Branch Distillery, LLC, and Lux Row Distillers LLC, before the acquisition by MGP. This means that he is likely to have a very good understanding of MGP’s prospects. It’s worth noting that he has made a number of well-timed stock purchases in the recent past.
What caught our attention here was the size of the trade. The fact that Mr. Lux has spent nearly $500,000 on shares suggests that he expects the stock to continue rising.
Strong Q1 Results
MGP recently posted an excellent set of Q1 results that were ahead of expectations.
For the quarter, sales were up 80.2% year on year to $195.2 million, with sales growth in each of the company’s reporting segments. Meanwhile, net income increased 142.2% to $37.4 million. Adjusted basic and diluted earnings per share (EPS) came in at $1.69 versus $1.01 a year earlier.
Looking ahead, the company said that for 2022, sales are projected to be in the range of $690 million to $715 million while basic adjusted EPS are expected to be between $4.15 and $4.35. Analysts had been expecting $4.00 per share.
“We believe our expansive family of brands and spirits will continue to position us well for incremental growth,” commented President and CEO David Colo. “Our diverse product offering within the Ingredient Solutions segment continues to be aligned with strong consumer trends, as evidenced by our record results this quarter,” he added.
In light of these strong results, we see the insider buying here as a bullish indicator.