CEOs tend to have a deep level of insight into their companies’ operations and performance. Generally speaking, these insiders are way ahead of analysts and portfolio managers when it comes to business trends. If these individuals are buying company stock, it’s often a bullish indicator.
In this report, we are going to highlight a large CEO purchase at The Greenbrier Companies Inc (GBX:US). Greenbrier is a leading designer and manufacturer of railroad freight car equipment in North America and Europe, and a manufacturer of ocean-going marine barges in North America. The company operates an integrated business model in North America that combines freight car manufacturing, wheel services, repair, refurbishment, retrofitting, component parts, leasing, and fleet management services. It is listed on the New York Stock Exchange and currently has a market capitalization of $1.4 billion.
The Greenbrier Companies Inc: Insider Buying
Our records show that on 19 April, Chairman and CEO William Furman bought 50,000 GBX shares at a price of $43.85 per share. This purchase – which cost the insider $2.2 million – increased the size of his holding by 10%.
This insider trade is worth highlighting for a couple of reasons. Firstly, it is large both in nominal and relative terms. This suggests that Furman is confident the stock is set to move higher. It’s worth noting that Furman also purchased 50,000 in February at around the same price. Overall, he has spent just under $4.4 million on GBX stock this year.
Secondly, Furman has timed his purchases well in the recent past. Last year, for example, he purchased 100,000 shares in May at a price of $16.52 per share. Since then, the stock has risen approximately 160%.
Greenbrier’s most recent quarter, for the three months ended 28 February, was disappointing. For the quarter, revenue came in at $295.6 million, down 53% year on year. Meanwhile, earnings per share for the period were $(0.28) versus $0.42 in the same period last year.
However, looking ahead, the company was optimistic in relation to the near-term outlook. Management expects the second half of fiscal 2021 to be stronger than the first half, due to increased production rates and stronger activity across the business.
“Our near-term outlook is becoming increasingly optimistic as rail fundamentals improve. Greenbrier is well-positioned for an economic recovery. Our pipeline of new business inquiries in North America has expanded dramatically in the last 30 days,” said William Furman.
Looking further out, the company was also optimistic about its long-term prospects. “Proposed environmental and other regulations in both North America and Europe should support secular demand for rail as a growing mode for freight transport. Fiscal stimulus and proposed infrastructure legislation are expected to further add to demand," said Furman.
In light of this confidence from the Chairman and CEO, we see the insider buying here as bullish.