Top-level corporate insiders such as CEOs and Chairmen tend to have the most up-to-date information on their companies. If they’re buying company stock, it’s usually because they think the company is performing better than the market thinks it is.
In this report, we are going to highlight some buying from a top-level insider at Veritiv Corp (VRTV:US). Veritiv Corporation is a full-service provider of packaging, JanSan, and hygiene products, services, and solutions. It also provides print and publishing products, and logistics and supply chain management solutions. It is listed on the New York Stock Exchange and currently has a market capitalization of $1.8 billion.
Veritiv Corp: Insider Buying
Our data shows that on November 30, Chairman Stephen Macadam bought 1,500 VRTV shares at a price of $126.63 per share. This trade cost the insider around $190,000 and increased his holding to 6,500 shares.
This trade is worth highlighting for several reasons.
Firstly, it is a relatively large purchase. We can see that it has increased the size of Mr. Macadam’s holding by a significant 30%, which suggests he is confident the stock is set to move higher. Our Insider Model views the trade as bullish.
Secondly, Mr. Macadam has made a well-timed purchase in the recent past. Our data shows that in March of 2021, the insider spent $200,000 on stock when it was trading below $40. Since then, it has risen to $120.
Third, Mr. Macadam has more than 30 years of experience advising and leading businesses in the packaging, building materials, and pulp and paper industries. This means he is likely to have a very good understanding of the industry, and his company’s prospects.
Strong Q3 Results
Veritiv recently posted a strong set of Q3 results.
For the three months ended September 30, 2021, net sales amounted to $1.8 billion, an increase of 11.1% from the prior year, while net income was $40.0 million, compared to $21.1 million in the prior year. Adjusted EBITDA came in at $93.7 million, an increase of 88% from the prior year, while adjusted EBITDA margin was a record 5.3%, an increase of 220 basis points from the prior year. At the end of the period, the group’s leverage ratio was at a record low of 1.5x.
“Double-digit Packaging sales growth contributed to our best earnings and adjusted EBITDA margin performance of any quarter in company history," commented CEO Sal Abbate. “The ongoing benefits of our 2020 Restructuring Plan, as well as commercial and supply chain productivity, drove significant financial improvement throughout the business resulting in net income nearly doubling in the third quarter compared to prior year," he added.
On the back of these strong results, Veritiv increased its guidance for the full 2021 year (after increasing its guidance in August). It now expects adjusted EBITDA to be in the range of $315 to $330 million and net income to be in the range of $130 to $145 million. Previously, it was expecting adjusted EBITDA of $270 million to $290 million and net income of $100 million to $120 million.
In light of these strong results, we see the insider buying here as a bullish indicator.