Insiders who purchased AU$9.59 million worth of Domino’s Pizza Enterprises Limited (ASX:DMP) shares in the past year may have been disappointed by the recent 13% drop in the company’s stock price. The shares, bought at an average price of AU$31.69, are now worth AU$8.48 million, reflecting a significant decline in value.
While insider transactions are not the sole indicator of long-term company prospects, they are certainly worth noting. Insiders typically purchase shares with the expectation that the company’s value will grow over time, but the recent downturn has raised questions about their initial optimism.
Insider Transactions Over the Past Year
The largest insider purchase in the last 12 months came from Jack Cowin, the Non-Executive Chairman, who bought AU$9.5 million worth of shares at AU$31.67 each. This purchase was made at a price higher than the current market price of AU$28.03 per share. While it is possible that Cowin may regret the decision, it is also plausible that he remains optimistic about the company’s future, especially considering the price he was willing to pay.
In total, insiders purchased 302.6K shares over the last year, investing AU$9.6 million. In contrast, they sold 25K shares worth AU$752K. Overall, insiders bought more shares than they sold, which suggests confidence in the company’s future.
Insider Ownership and Company Alignment
Domino’s Pizza Enterprises insiders own approximately 4.8% of the company, which equates to AU$125 million in shares. While this ownership is not exceptionally high, it is sufficient to indicate a degree of alignment between the company’s management and its shareholders. A significant level of insider ownership often signals that executives are motivated to act in the best interests of all shareholders.
What Do the Insider Transactions Indicate?
While no insider transactions have occurred in the past three months, the overall trend from the past year remains positive. High insider ownership and the volume of recent purchases suggest that management believes in the company’s future potential despite recent stock price declines.
However, investors should also be aware of the inherent risks. Every company faces challenges, and Domino’s Pizza Enterprises has its own set of risks to monitor. In fact, we have identified four warning signs that potential investors should be mindful of before making any decisions regarding the company’s stock.
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