Insider Buying

Insider Buying Report: Provident Financial Services Inc (PFS:US)

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Provident Financial Services Inc (PFS:US)

12-month performance: -52%
Insider activity: Bullish
Insider buying pattern: Large purchase from CEO
Recent news: Merger with SB One Bancorp

It’s not a stretch to say that CEOs are some of the most informed participants in the market. If these insiders are buying stock, investors should take note.

Here, we are going to highlight a recent CEO purchase at Provident Financial Services Inc (PFS:US). Provident Financial Services is the holding company for Provident Bank – a full-service bank that caters to the financial needs of businesses, individuals, and families throughout northern and central New Jersey and Eastern Pennsylvania. The company is listed on the New York Stock Exchange and currently has a market capitalization of $954 million.

Provident Financial Services: insider buying

An analysis of insider transaction activity at Provident Financial Services reveals that the CEO, Christopher Martin, recently purchased a large number of shares in the company. Form 4 filings show that on 10 September, the insider bought 25,000 shares, paying $12.78 per share. The total cost of the transaction was $319,428.

PFS-US (chart)     Source: 2iQ Research

First CEO purchase in over five years

This insider purchase looks interesting for a couple of reasons. Firstly, it is a substantial purchase. This purchase – which has boosted the insider’s holding by 7% – is the largest single insider purchase in several years.

Secondly, our records show that Martin does not purchase stock very often. This is his first purchase of PFS stock in over five years. This suggests that the stock could be worth a closer look right now.

Growth opportunities

Provident Financial Services shares have underperformed this year as the company has been impacted by Covid-19. For the second quarter, reported net income was $14.3 million, significantly below last year’s figure of $24.4 million. Earnings were adversely impacted by elevated provisions for credit losses primarily related to the pandemic, combined with the adoption of new CECL accounting standards.

However, in the Q2 results, Martin was relatively upbeat in relation to the outlook for the company, highlighting the potential of the company’s recent merger with SB One Bancorp. “We look forward to capitalizing on the growth opportunities, scale and strong management that this strategic transaction affords us.”

Martin’s recent purchase of 25,000 shares suggests that he is confident about the future and that he believes the stock is undervalued right now. We see this large insider purchase as a bullish signal.

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