Yahoo Finance Should You Follow This Trend For Imperial Metals Corporation (TSE:III)?
Imperial Metals Corporation acquires, explores for, develops, and produces base and precious metals in Canada. Imperial Metals is one of Canada’s small-cap stocks that saw some insider buying over the past three months, with insiders investing in more than 1.83 million shares during this period. A well-known argument is that insiders investing more in their own companies’ shares sends an optimistic signal. The MIT Press (1998) published an article showing that stocks following insider buying outperformed the market by 4.5%. However, these signals may not be enough to gain conviction on whether to invest. Today we will evaluate whether these decisions are bolstered by analysts’ expectations of future growth as well as recent share price movements.
See our latest analysis for Imperial Metals
Who Are The Insiders?
There were more Imperial Metals insiders that have bought shares than those that have sold. In total, individual insiders own over 51.36 million shares in the business, which makes up around 42.52% of total shares outstanding.
The following insiders have recently increased their company holdings: Larry G. Moeller (board member) and Norman Edwards This statement is created if only one individual insider bought company shares in past 3 months .
Is This Consistent With Future Growth?
Analysts’ expectations for revenue growth over the next 3 years of 38.5% provides a satisfactory outlook for the company which is consistent with the signal company insiders are sending with their net buying activity.
Digging deeper into the line items, analysts anticipate a restrained level of top-line growth over the next year, which seems to trickle into the bottom line growth rate of 4.8%. Initiatives to drive the top-line as well as improved cost management could see higher levels of future earnings.
Insiders confident in the company’s potential to deliver continued growth could provide incentives to buy now.
Did Insiders Buy On Share Price Volatility?
An alternative reason for recent trades could be insiders taking advantage of the share price volatility. A correlation could mean directors are trading on market inefficiencies based on their belief of the company’s intrinsic value.
Within the past three months, Imperial Metals’s share price traded at a high of CA$2.16 and a low of CA$0.99. This suggests a significant level of volatility in share price with a change of 118.18%.
Insiders could perceive this meaningful movement as an opportunity to accumulate their shareholdings.
Next Steps:
Imperial Metals’s net buying tells us the stock is in favour with some insiders, which is fairly consistent with earnings growth expectations, as well as the significant share price volatility over the same period of trade. However, while insider transactions could be a helpful signal, it is definitely not sufficient on its own to make an investment decision. there are two relevant factors you should look at:
Financial Health: Does Imperial Metals have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of Imperial Metals? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
