Top-level corporate insiders such as CEOs tend to have the most up-to-date information on their companies. If these insiders are buying company stock, it’s often worth taking a closer look.
In this report, we are going to highlight a large CEO purchase at Pool Corporation (POOL:US). Pool Corp is the world's largest wholesale distributor of swimming pools and related outdoor living products. Operating in North America, Europe and Australia, it provides products in relation to pool construction, pool maintenance, and outdoor living. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $17.3 billion.
Pool Corp: Insider Buying
Our insider transaction data shows that on 19 May, Pool’s CEO and President Peter Arvan bought 465 shares at a price of $429.30 per share. This purchase cost the insider $199,625.
High Trading IQ
This insider transaction stands out for two reasons. Firstly, it is substantial in size. Our data shows that it is the largest insider purchase at Pool for several years. This suggests that the CEO is confident the stock is set to move higher.
Secondly, Arvan – who joined the company as COO in 2017 – has a good track record when it comes to timing his purchases well. Our data shows that his last purchase was in March when the stock was trading at $316. Since then, it has risen to $430. Our model gives the insider a high long-term Trading IQ of 107.
Record Q1 Results
Pool Corp recently posted a very strong set of first-quarter results. For the quarter, net sales increased 57% to a record $1.06 billion, while base business sales grew 51%, with growth driven by stay-at-home trends. Meanwhile, operating income came in at $129.0 million, up 263% from Q1 2020 with a 690 basis point improvement in operating margin. Diluted earnings per share (EPS) for the quarter were a record $2.42, up 223% year on year.
As a result of this strong performance, the company raised its guidance for 2021. It now expects EPS of $11.85 - $12.60, compared to previous guidance of $9.12 - $9.62.
"We kicked off the year with truly remarkable results, including record net sales and phenomenal bottom line results. Looking ahead at the remainder of the year, we expect to achieve strong growth," said Mr. Arvan.
In light of these results, and the increased guidance, we see the insider buying here as bullish.