Some Eaton Corporation plc (NYSE:ETN) shareholders may be a little concerned to see that the Chairman & CEO, Craig Arnold, recently sold a substantial US$16m worth of stock at a price of US$305 per share. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 9.4%.
Our free stock report includes 2 warning signs investors should be aware of before investing in Eaton. Read for free now.The Last 12 Months Of Insider Transactions At Eaton
In fact, the recent sale by Chairman & CEO Craig Arnold was not their only sale of Eaton shares this year. They previously made an even bigger sale of -US$22m worth of shares at a price of US$362 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$310. So it may not shed much light on insider confidence at current levels.
Happily, we note that in the last year insiders paid US$812k for 2.71k shares. But insiders sold 142.37k shares worth US$48m. All up, insiders sold more shares in Eaton than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Check out our latest analysis for Eaton
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Insider Ownership Of Eaton
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Eaton insiders own 0.2% of the company, worth about US$255m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Eaton Insider Transactions Indicate?
Insiders haven't bought Eaton stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn't give us much comfort. But it is good to see that Eaton is growing earnings. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Eaton. Every company has risks, and we've spotted 2 warning signs for Eaton you should know about.
Of course Eaton may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.