2iQ Insider Brief: Webjet Ltd (WEB: AU) Imperial Brands PLC (IMB: LN) Keller Group PLC (KLR: LN)

Kaloyan Kolev 2 October 2019

Webjet Ltd (WEB: AU)

 12-month performance: -29%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO and Vice Chairman 
Recent news: Impacted by Thomas Cook liquidation

 

 

Webjet is an Australian company that provides online travel booking services. Founded in 1998, the company enables customers to compare, combine, and book domestic and international flights, hotel accommodation, holiday package deals, travel insurance, and car hire. The stock is listed on the Australian Stock Exchange and currently has a market capitalisation of AUD $1.4 billion.

Webjet shares have fallen to their lowest level in nine months recently on the back of UK travel firm Thomas Cook’s liquidation. The company advised that the liquidation is expected to reduce its accommodation unit’s FY2020 EBITDA by up to AUD $7 million, and as a result, a number of brokers including Credit Suisse and Morgan Stanley have downgraded the stock.

WEB_AUSource: 2iQ Research

What we think is interesting about this situation is that in the last week both CEO John Guscic and Vice Chairman Donald Clarke have purchased Webjet shares. That’s a bullish signal in itself, however, looking at past insider transaction records, both of these insiders have excellent track records when it comes to timing their purchases well – Guscic has a 2iQ short-term IQ of 125, while Clarke has a 2iQ short-term IQ of 118. The last time Guscic purchased shares, the stock rose around 80% in the following nine months. While Webjet clearly has some short-term issues to work through after Thomas Cook’s liquidation, we think there’s a good chance the stock could rebound in the near future, given the track record of these insiders.

 

Imperial Brands PLC (IMB: LN)

 12-month performance: -30%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO, CFO and Chairman 
Recent news: Downgraded revenue growth guidance

 

 

Imperial Brands is a fast-moving consumer goods company with a tobacco heritage. The group owns a number of well-known cigarette brands including Davidoff, West, and Winston, and also has exposure to next-generation products (NGP) such as vapour and heated tobacco products. The stock is listed on the London Stock Exchange and currently has a market capitalisation of £17.4 billion.

 

Imperial Brands disappointed investors last week when it downgraded its revenue guidance for the year ending 30 September. The company advised that it now expects group net revenue growth of around 2% for the period, with earnings growth expected to be flat for the year. Previously, Imperial had said that it expected revenue to grow at or above the upper end of its forecast range of 1% to 4%, with profit rising between 4% and 8% in the medium term. The group blamed a challenging NGP market in the US for the slowdown, however, it also said that it believes NGP provides a “significant opportunity.” The stock fell over 10% on the news.

IMB_LNSource: 2iQ Research

Looking at insider transaction activity, we think the recent share price fall has created a buying opportunity. We say this because since the group’s trading update five directors have stepped up to purchase shares in Imperial – including CEO Alison Cooper, CFO Oliver Tant, and Chairman Mark Williamson – which suggests that these insiders expect the shares to rise in the future. We view this as a bullish signal. With the stock currently trading on a P/E ratio of just 6.8, and multiple insiders going long, we think the risk/reward proposition here is attractive.  

 

Keller Group PLC (KLR: LN)

 12-month performance: -45%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CFO and Chairman 
Recent news: CEO stepped down

 

 

Keller Group is the world’s largest independent ground engineering company. Specialising in providing advanced foundation solutions for complex projects, the company has operations in over 40 countries across six continents. The stock is listed on the London Stock Exchange and currently has a market capitalisation of £409 million.

 

Keller shares have underperformed since mid-September after the group advised that trading momentum in North America had started more slowly than expected in the second half of the year, and that CEO Alain Michaelis had decided to step down. This news caused the shares to fall from 700p to 550p. However, the company did reaffirm its expectations for the full year, and also advised that it remains “strategically well positioned,” with favourable market fundamentals expected to support profitable growth in the medium term.

KLR_LNSource: 2iQ Research

While Keller shares are understandably out of favour with investors after recent news flow, looking at insider transaction activity, we think they could be worth a closer look right now. This is due to the fact that since the company’s most recent trading update we have observed substantial purchases from interim CEO Michael Speakman (20,000 shares), Chairman Peter Hill (18,000 shares), and Engineering and Operations Director Venu Raju (20,000 shares). These three insiders are likely to have a good understanding of the company’s prospects, so their purchases indicate that they are confident about the future. With the company well placed to take advantage of urbanisation and infrastructure growth market trends, and three insiders buying shares, we think the stock has the potential to rebound in the medium term.

Disclaimer: Neither 2iQ Research GmbH nor its content providers are responsible for any damages or losses arising from any use of this information.

Getting the most of Insider Trading Data - Free Book

Download
ebook-sample