A Number of Packaged Software Firms Saw Insiders Sell Shares in the Last Few Days
Insider selling and buying is an indicator that probably doesn’t get as much attention as it deserves. It can be a little difficult to keep track of and sometimes the trading is done at specified times due to required holding periods.
One thing is certain though, it can be concerning when you see insider selling at a number of different firms within the same sector. This is exactly what has occurred in the last week with the packaged software industry. Seven different companies from the industry saw significant insider selling over the past week. The dollar amounts of the transactions varied from $1.6 million to as much as $79.7 million.
The group as a whole does very poorly on the Tickeron Scorecard with six of the seven stocks earnings “sell” or “strong sell” ratings. The only stock that scores very well is Intuit (INTU) and it gets a “strong buy” rating. Everbridge (EVBG) is the only one that got a “strong sell” rating, but the other five stocks all earned “sell” ratings.
Looking at both the fundamental and technical screeners, the issues seem to be on both sides of the equation. On the fundamental side, only Intuit has more bullish signals than bearish signals. The company has three bullish and no bearish signals. Conversely, four of the other companies have one bullish signal and two don’t have any bullish signals. If you exclude Intuit, the other six companies have a combined four bullish signals and 22 bearish signals.
The technical picture is a little better, but not by much. Again Intuit is the best of the bunch with three bullish signals and only one bearish signal. Health Catalyst (HCAT) is the only other company with a bullish skew. The company has four bullish signals and two bearish signals. The collective totals of the other five companies are eight bullish signals and 23 bearish signals.
If we look at particular indicators, there are a couple on both the fundamental side and on the technical side that seem to be an issue. On the fundamental side, the Profit Vs. Risk ratings for six of the seven stocks are at 100—the worst possible rating. The only one that scores well? You guessed it, Intuit. The same can be said for the P/E Growth Rating. Six of the seven stocks score a 100 while Intuit has a neutral score.
The technical indicators, as we saw with the overall scores, aren’t as bad as the fundamental indicators. The RSI indicators are concerning with six of the seven stocks generating bearish signals in the last three weeks and five of them coming in the past week. Health Catalyst is the only bullish signal from its RSI and that came eight days ago. The stochastic indicators are somewhat concerning with four bearish signals in the past week and no signals for the other three stocks.
One area that I expected to be an issue was the valuation ratings. From their lows in March, a number of these stocks have seen huge gains, even bigger than some of the other tech stocks. For instance, Livongo Health (LVGO) was up over 500% from March 18 through September 2—before the selling hit the market last week. CrowdStrike (CRWD) and Bill.com Holdings (BILL) both gained around 250% during this same time period. Slack (WORK) gained 86%, Health Catalyst gained 67%, and Intuit gained 58%. Everbridge was the biggest laggard of the bunch during this time period and it still gained 30%.
Since the selling started last Thursday, these stocks have gotten hit pretty hard and the insiders that sold last week are looking pretty good with their timely sales. Again, insider selling isn’t always as simple as the person deciding the price is right and it’s time to sell some of their stake, but when we see widespread selling in an industry, it is usually a pretty bearish sign.
INTU's Stochastic Oscillator stays in oversold zone for 5 days
The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an uptrend is expected.
Technical Analysis (Indicators)
Bullish Trend Analysis
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where INTU advanced for three days, in of 354 cases, the price rose further within the following month. The odds of a continued upward trend are .
INTU may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on April 10, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on INTU as a result. In of 101 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for INTU turned negative on April 10, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 51 similar instances when the indicator turned negative. In of the 51 cases the stock turned lower in the days that followed. This puts the odds of success at .
INTU moved below its 50-day moving average on April 01, 2024 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for INTU crossed bearishly below the 50-day moving average on March 25, 2024. This indicates that the trend has shifted lower and could be considered a sell signal. In of 17 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where INTU declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for INTU entered a downward trend on April 19, 2024. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 90, placing this stock better than average.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. INTU’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (10.593) is normal, around the industry mean (29.871). P/E Ratio (65.347) is within average values for comparable stocks, (155.580). Projected Growth (PEG Ratio) (2.392) is also within normal values, averaging (2.725). Dividend Yield (0.005) settles around the average of (0.081) among similar stocks. P/S Ratio (12.019) is also within normal values, averaging (55.249).
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Fundamental Analysis Ratings
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General Information
a provider of software products for businesses
Industry PackagedSoftware