On September 15, 2023, Robert Fauber, President and CEO of Moody’s Corporation (NYSE:MCO), sold 2,546 shares of the company. This move is part of a trend observed over the past year, where the insider has sold a total of 15,091 shares and made no purchases.
Robert Fauber is a seasoned executive with a deep understanding of the financial services industry. As the President and CEO of Moody’s Corporation, he is responsible for the overall strategic direction and performance of the company. His recent sell-off of shares is noteworthy and warrants a closer look.
Moody’s Corporation is a leading provider of credit ratings, research, tools and analysis that contribute to transparent and integrated financial markets. The company’s primary role is to provide a clear view of the relative credit risk of financial products and entities. The company’s robust performance is reflected in its market cap of $61.59 billion.
The insider’s recent sell-off is part of a broader trend within the company. Over the past year, there have been 14 insider sells and no insider buys. This trend is illustrated in the following image:
The relationship between insider trading and stock price is complex. While it’s not uncommon for insiders to sell their shares, it’s important to consider the context. In this case, the insider’s sell-off does not necessarily indicate a lack of confidence in the company. It could be part of a personal financial strategy or a pre-scheduled trading plan.
On the day of the insider’s recent sell, shares of Moody’s Corporation were trading at $343.99. This gives the stock a price-earnings ratio of 43.82, which is higher than both the industry median of 18.41 and the company’s historical median price-earnings ratio. This suggests that the stock is currently overvalued.
However, according to the GuruFocus Value, which is an intrinsic value estimate based on historical multiples, a GuruFocus adjustment factor, and future business performance estimates, the stock is fairly valued. The stock’s price-to-GF-Value ratio is 1.08, as shown in the following image:
In conclusion, while the insider’s recent sell-off is noteworthy, it does not necessarily indicate a lack of confidence in the company. The stock’s current valuation suggests that it is fairly valued, despite its high price-earnings ratio. As always, investors should conduct their own research and consider multiple factors before making investment decisions.
This article first appeared on GuruFocus.