Top-level company insiders tend to have the most up-to-date information on the company they work for. If they’re buying their company’s stock, it’s generally a bullish development.
Here, we are going to highlight an insider purchase at Smurfit Kappa Group PLC (SKG:ID). Smurfit Kappa Group is a paper packaging company that operates in the Americas and Europe. It is Europe's leading corrugated packaging company and one of the leading paper-based packaging companies in the world. Most of its packaging is produced via its own paper mills. It’s traded on the Dublin and London Stock Exchanges and currently has a market capitalization of €11.24 billion.
Smurfit Kappa Group PLC: Insider Buying
Regulatory filings show that on 19 May, the CEO of Smurfit Kappa Group, Anthony Smurfit, purchased 3,000 SKG shares at a price of €43.49 per share. This purchase cost the insider approximately €130,000.
First Insider Purchase for over a Year
This insider purchase is worth highlighting for a couple of reasons. Firstly, insider purchases here are not very common. Our data shows that this is the first insider purchase at Smurfit Kappa since April last year. This suggests that Mr. Smurfit believes there is a buying opportunity at present.
Secondly, Mr. Smurfit has been a director of the company since 1989 and has worked in different parts of the business in both Europe and the United States. He has been CEO since 2015 and before this was Group Chief Operations Officer from 2002 to 2015. With this experience, it’s likely that he knows the business better than anyone else.
Strong Trading Update
Smurfit Kappa released an upbeat Q1 2021 trading statement recently that showed growth throughout the business. During the quarter, underlying revenue grew by 6% to €2.27 billion. Meanwhile, EBITDA came in at €386 million and EBITDA margin was a healthy 17%. The business did experience cost pressures but is working towards recovering the increase in input costs and whilst the paper packaging industry experienced supply issues, Smurfit Kappa’s integrated business model insulated it from these disruptions.
The outlook for the company was very positive. “The first quarter was remarkable in many ways. We had strong corrugated volume growth in practically every area and all markets in which we operate. Our strong first quarter performance has set the foundation for accelerated revenue and earnings growth as we move through 2021. This performance and these prospects reflect the strength and quality of Smurfit Kappa,” said Mr. Smurfit.
On the back of this trading update we see the recent insider buying as bullish. The outlook statement suggests that Mr. Smurfit expects this positive performance to continue. His recent insider trading signals to investors that he expects the share price to continue to rise.