Insider purchases can provide powerful insights for investors. Insiders may sell company stock for a variety of reasons. Yet they only buy stock for one reason – they expect that the price of the stock will rise.
Here, we are going to highlight an insider purchase at Ultra Electronics Holdings PLC (ULE:LN). Ultra Electronics Holdings provides application-engineered bespoke solutions in the defense and aerospace, security and cyber, transport, and energy markets. It’s listed on the London Stock Exchange and currently has a market capitalization of £1.44 billion.
Ultra Electronics: Insider Buying
Regulatory filings show that on 21 April, the CEO of Ultra Electronics Holdings, Simon Pryce, purchased 4,985 shares at a price of £19.93 per share. This purchase cost the insider approximately £100,000 and increased his holding by around 22%.
This purchase stands out because it is a large trade in monetary terms and it also lifts the insider’s holding by more than 20%. It, therefore, sends a strong signal to investors that Pryce is confident the share price is going to rise.
It’s worth noting that Pryce has significant industry experience within the aerospace and engineering sectors. He was CEO of BBA Aviation for ten years between 2007 and 2017 before joining Ultra Electronics Holdings as CEO in June 2018. He is also a Non-Executive Director at Electrocomponents. This means he is likely to have a good read on his firm’s prospects.
Continued Organic Growth
Ultra Electronics produced a very impressive set of 2020 results, given the economic environment. The order book grew 4% year on year to £1.064 billion and revenue grew 4.2% to £859.8 million. Operating profit increased by 6.7% to £126.1 million versus the year before. Earnings per share were up 12.3% to 118 pence versus 2020 and the total dividend came in at 56.9p, an increase of 5%. The company outperformed its market peers and the results were ahead of analyst’s expectations, leading to brokers upgrading the stock.
“We enter 2021 with a record order book giving us strong visibility, and we remain well-positioned in key growth areas to support customers’ evolving priorities. We continue to increase our technology investment, expanding the areas in which we can provide effective customer solutions. Our ONE Ultra transformation program is having a positive impact on both growth opportunities and operational efficiency, and with strong 2020 delivery, we are confident enough to accelerate several of our transformation actions in 2021. This should see us begin to realize year-on-year benefits in 2022, a year ahead of plan”, said Simon Pryce, the Chief Executive.
Given these exceptional results, we see the insider trading at Ultra Electronics Holdings as bullish. It would appear that the CEO is very confident that the momentum that has been built up over recent years, will continue, leading to a rise in the share price.