Jennifer Hyman, a director at Estee Lauder (EL), recently bought 1,350 shares. The buy increased her stake by 135 percent, and came to a total cost of $198,045.
This marks the first insider buy over the last two years. Otherwise, company insiders have been regular and steady sellers of shares, mostly in 2022 and early 2023, in particular the company’s President and CEO. Most sales from other executives have come following the exercise of stock options.
Overall, Estee Lauder insiders own 0.4 percent of shares.
The cosmetics producer has seen shares drop nearly 44 percent over the past year, as the company has seen a significant slowdown in sales. Total earnings are off by 20 percent, and revenues have dropped by 7 percent.
This operational slowdown has pushed shares from 34 times earnings last year to over 74 times forward earnings this year.
Action to take: With shares in a downtrend, investors should look for more than just one insider buy before buying shares now.
The past few months has seen Estee Lauder shares try to move higher, but shares seem stuck under $150. Shares do pay a 1.9 percent dividend, but the payout is more than twice the company’s earnings, and could be at risk of a cut down the line.
For traders, the April $135 puts, last going for about $4.40, could see mid-double-digit returns on a further slide lower in the coming weeks.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.