Top-level corporate executives such as CEOs and CFOs tend to have an information advantage over other investors. If these insiders are buying company stock, it’s generally a positive development.
Here, we are going to highlight a CEO purchase at Zooplus AG (ZO1:GR). Zooplus is a German retailer that sells a vast selection of pet care products through its online stores. The company is listed on Deutsche Börse’s Xetra and currently has a market capitalization of €1.4 billion.
Zooplus: Insider Buying
Our records show that on 15 January, Zooplus CEO Cornelius Patt bought 2,800 shares at a price of €165.34 per share. This purchase – his first since March 2020 – cost the insider €462,952.
Insider trading IQ
This insider transaction is worth highlighting for a couple of reasons. Firstly, Patt has an excellent track record when it comes to the timing of his purchases and sales in Zooplus. In the past, he has often bought on the dips and then sold near the highs very effectively.
Secondly, this is a large purchase for the insider. Our data shows that it is his largest purchase for several years. Interestingly, this purchase is at a much higher price than his recent purchases. This suggests he’s confident the stock is set to move higher.
Strong Q3 Results
Zooplus’ last trading update, posted on 17 November 2020, showed that the company has considerable momentum right now. Highlights of the update, which covered the nine-month period to 30 September 2020, included:
Sales of €1.3 billion, representing growth of 18% year on year
Sales retention of 97% – a new record level
EBITDA of €47.8 million versus €6.7 million the year before
Gross margin of 30.5% versus 28.5% the year before
Strong free cash flow of €52.8 million versus €9.5 million the year before
Looking ahead, management sounded confident about the future. “We have now entered the final quarter of 2020 with this tailwind and are well on track to achieve the new targets for the current financial year announced in mid-October," said Dr Patt.
Given this excellent update, we see the insider buying here as a bullish signal.