PepsiCo, Inc. (NASDAQ:PEP) insiders sold US$11m worth of stock, possibly signalling a downtrend

Simply Wall St
·3 min read
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Many PepsiCo, Inc. (NASDAQ:PEP) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for PepsiCo

PepsiCo Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Vice Chairman, Hugh Johnston, for US$6.0m worth of shares, at about US$161 per share. That means that an insider was selling shares at slightly below the current price (US$166). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 20% of Hugh Johnston's stake.

In the last year PepsiCo insiders didn't buy any company stock. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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insider-trading-volume

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insiders At PepsiCo Have Sold Stock Recently

The last three months saw significant insider selling at PepsiCo. In total, insiders sold US$900k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership Of PepsiCo

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. A high insider ownership often makes company leadership more mindful of shareholder interests. PepsiCo insiders own about US$318m worth of shares (which is 0.1% of the company). 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 PepsiCo Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. But it is good to see that PepsiCo is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing PepsiCo. While conducting our analysis, we found that PepsiCo has 3 warning signs and it would be unwise to ignore them.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.

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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.

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