Federal Reserve officials in their last meeting said that they need to act "expeditiously" to bring down the near 40-year-high U.S inflation. Most participants now anticipate three half-a-percentage-point interest rate increases for the months ahead, as per the minutes of the Fed’s May meeting.
In Thursday’s trading session, the broader market indices again posted a rally. The Dow rose 1.6%, the S&P 500 added about 2%, while the tech-heavy Nasdaq Composite climbed about 2.7%. The market seems set to end the week in the green. However, it is down significantly on a year-to-date basis.
Insider buying refers to share purchases by an executive, director, or officer of the issuing company. The behavior indicates confidence in the company’s earnings and growth. Insider buying has increased for the stocks of Caterpillar Inc. (CAT), PLBY Group, Inc. (PLBY), and RenaissanceRe Holdings Ltd. (RNR) over the past few months, indicating optimism amid the market’s volatility.
Caterpillar Inc. (CAT)
CAT in Peoria, Ill., manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company operates through the broad segments of Construction Industries; Resource Industries; Energy & Transportation; Financial Products; and All Other.
On May 5, CAT’s Director David MacLennan bought 600 shares at $219.82 after buying 480 shares at $199.50 in February. And officer Bob De Lange executed his option to buy 11,718 shares at $74.77 in April.
The company recently authorized a $15 billion stock repurchase program. On April 28, CAT announced that it had repurchased $800 million worth of its shares during the first quarter as part of its $10 billion repurchase program and had about $1.4 billion remaining as of March 31.
On May 5, CAT announced that it had acquired Tangent Energy Solutions, an energy-as-a-service (EaaS) company that provides turnkey solutions to reduce energy costs, increase energy efficiency, and reduce emissions. This is expected to increase CAT’s operational capacity.
For its fiscal first quarter, ended March 31, CAT’s total sales and revenues increased 14.3% year-over-year to $13.59 billion. Its profit rose 0.5% from the prior-year quarter to $1.54 billion. And its profit per common share improved 3.2% from the same period the prior year to $2.86.
The $3.01 consensus EPS estimate for its fiscal quarter ending June 30, 2022, indicates a 15.8% year-over-year increase. And the $14.38 billion consensus revenue estimate for the same quarter reflects an 11.6% improvement from the prior-year period. Furthermore, CAT has an impressive surprise earnings history; it has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 3% in price year-to-date and 13.9% over the past three months to close yesterday’s trading session at $212.99.
PLBY Group, Inc. (PLBY)
PLBY in Los Angeles, is a pleasure and leisure company that operates worldwide. The company operates through Licensing; Direct-to-Consumer; and Digital Subscriptions and Content. It offers its products under its flagship brand Playboy.
On March 24, PLBY Officer Lance Barton bought 2,650 shares at $14.55, Officer Bernhard Kohn bought 5,425 shares at $14.74, and Officer Christopher Riley bought 1,630 shares at $14.18. Kohn had earlier bought shares twice in March.
On May 17, PLBY announced a $50 million common stock repurchase program after securing financing through a private placement of preferred stock. PLBY Chief Executive Officer Ben Kohn said, “We believe this is a great opportunity to create long-term, sustainable value for our shareholders.”
On April 28, PLBY announced its new commercial licensing talent, award nominations, and global strategic brand collaborations. This should expand the company’s product offerings. In the first quarter, PLBY launched brand collaborations with several collections.
PLBY’s net revenues increased 62.6% year-over-year to $69.38 million in its fiscal first quarter, ended March 31. Its net income and net income per share came in at $5.54 million and $0.12, respectively, up substantially from their negative year-ago values.
Analysts expect PLBY’s EPS to increase 111.1% year-over-year to $0.02 for its fiscal quarter ending Sept. 30, 2022. The Street expects its revenue for the same quarter to rise 48% from the prior-year quarter to $86.37 million.
The stock has gained 2.3% in price over the past five days and gained 4.3% intraday to close yesterday’s trading session at $9.33.
RenaissanceRe Holdings Ltd. (RNR)
RNR, headquartered in Pembroke, Bermuda, is a reinsurance and insurance products provider operating internationally. The company operates through its three broad segments of Property; Casualty; and Specialty.
On May 16, RNR Director Shyam Gidumal acquired 1,040 shares. And on March 1, several other company directors acquired 1,065 shares of the company.
On May 16, RNR announced a quarterly dividend of $0.37 per common share, payable to shareholders on June 30. In addition, the company declared the renewal of its authorized share repurchase program, bringing the total current authorization up to $500 million, which is expected to expire when it has repurchased the full value of the shares authorized. This reflects upon the company’s ability to pay back its shareholders.
On April 5, RNR announced the creation of Fontana Holdings L.P. and its subsidiaries, an innovative joint venture dedicated to writing Casualty and Specialty risks. The company intends to enhance shareholder value by providing a fixed source of fee income.
For its fiscal first quarter ended March 31, RNR’s total revenues increased 1.7% year-over-year to $876.42 million. Its operating income available to common shareholders and operating income per common share available to common shareholders improved 3,357.2% and 3,788.9%, respectively, from the prior-year period to $151.95 million and $3.50.
The Street’s $0.87 EPS estimate for the quarter ending Sept.30, 2022 indicates a 111% year-over-year improvement. And the Street’s $1.52 billion revenue estimate for the same quarter reflects an 11.3% rise from the prior-year quarter.
The stock has gained 5.3% in price over the past month and 2.5% over the past five days to close yesterday’s trading session at $152.47.
CAT shares were trading at $215.59 per share on Friday afternoon, up $2.60 (+1.22%). Year-to-date, CAT has gained 5.29%, versus a -12.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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