Top-level corporate insiders such as CEOs and CFOs tend to have the most up-to-date information on their businesses. If they’re buying company stock, it’s generally a sign that the outlook for the stock is attractive.
Here, we are going to highlight some buying from top-level insiders at Smart Global Holdings Inc (SGH:US). Smart Global Holdings is an American company that produces innovative solutions for computers and smartphones globally. The business is split into three divisions: Intelligent Platform Solutions, Memory Solutions, and LED Solutions. It’s traded on the Nasdaq and currently has a market capitalization of $930 million.
Insider buying at Smart Global Holdings Inc
Our insider transaction data shows that on July 26, two insiders at Smart Global Holdings bought stock. Those who bought shares were:
- CEO Mark Adams (10,000 shares @ $18.10 per share)
- CFO Ken Rizvi (4,250 shares @ $17.85 per share)
In total, the two insiders spent around $250,000 on Smart Global Holdings stock.
High Insider Score
This trading activity is worth flagging due to the fact that both the CEO and CFO of the company have purchased stock.
These two insiders are likely to have a good understanding of the company’s prospects. Mr. Adams has been CEO for two years and prior to this held senior positions within the computer solutions industry. Previously, he was President of Micron Technology Inc.
Meanwhile, Mr. Rizvi has over 20 years of experience in the technology industry and was previously CFO at both UTAC Holdings Ltd and Isola Group.
It’s worth noting that our Insider Model has given the stock a score of 5 out of 5, which suggests that insider sentiment is very high at Smart Global Holdings.
Smart Global Holdings recently published impressive Q3 numbers, posting year-over-year revenue growth for the ninth consecutive quarter.
For the period, net sales of $463 million were up 6% versus Q3 2021. GAAP gross margin came in at 24.7%, which was 540 basis points higher than the year-ago quarter. The GAAP EPS of $0.44 was a significant improvement on the GAAP EPS loss of $0.15 a year prior.
During the quarter, the company was able to buy back 450,000 shares for a cost of $10.2 million. The company also entered into a definitive agreement to acquire Stratus Technologies, a leader in its specialist field.
"I am extremely proud of our team’s execution in Q3 in the midst of the macroeconomic headwinds that all companies are facing. We achieved strong financial results, with our ninth consecutive quarter of year-over-year revenue growth, coupled with strong gross margins and EPS, both of which exceeded our third quarter guidance," said Mr. Adams.
This strong momentum within the business does not appear to be factored into the stock’s valuation, however. At present, the stock has a forward-looking P/E ratio of just six.
Given these strong Q3 results, and the low valuation, we see the insider buying here as a bullish indicator.