Insider Selling Raises Questions for Cars.com Investors
Multiple insiders at Cars.com Inc. (NYSE:CARS) have been offloading a significant number of shares over the past year, leading investors to question their motives. While insider transactions can be open to interpretation, selling by numerous insiders is a cause for further investigation. While it is not advisable to base investment decisions solely on insider activity, monitoring their actions can provide valuable insights.
The largest insider sale in the past 12 months was made by CEO & Director, T. Vetter, who sold shares worth US$1.5 million at a price of US$17.35 each. This sale raises some concerns, as it took place at around the current market price of US$17.31. Typically, insider selling at a lower price is more worrisome. However, the fact that there have been no insider purchases in the past year is also noteworthy.
In the last three months alone, CEO & Director T. Vetter sold shares worth US$336,000, while no insider purchases were recorded. This suggests that some insiders may believe that the shares are overvalued.
To assess the alignment between company leaders and shareholders, it is important to consider insider ownership. Insiders own approximately 1.9% of Cars.com shares, valued at around US$23 million. While this level of ownership indicates a reasonable degree of alignment, it is not particularly standout.
Overall, the insider transactions at Cars.com indicate that while there have been recent sales, there have been no purchases. However, given that the company is profitable and growing, this is not a major cause for concern. It is important to exercise caution and consider the risks before making any investment decisions.
As for the risks and opportunities for Cars.com, the company operates as a digital marketplace and provides solutions for the automotive industry. Despite the recent insider selling, the stock is currently trading at 53.3% below its estimated fair value. Earnings have also grown significantly by 1097.3% over the past year. However, it is worth noting that earnings are forecasted to decline by an average of 22.6% per year for the next three years. Additionally, interest payments are not well covered by earnings, indicating a potential financial risk.
In conclusion, while insider selling at Cars.com has raised questions for investors, the company’s profitability and growth provide some reassurance. However, it is important to carefully consider the risks and conduct further analysis before making any investment decisions.
Original Story at simplywall.st – 2023-09-16 12:06:45
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