Insiders Go Shopping with At Home

12/19/2018 5:00 am EST


Tom Bishop

Founder, BI Research

At Home (HOME) is a home décor superstore which offers 50,000 on-trend home products to fit any budget or style; there are 168 stores open and they expect to open 31 stores in all this year,  explains small cap expert Tom Bishop, editor of BI Research.

At Home hit an air pocket in the wake of the release of Q3 earnings (on December 6th). The company posted a 25% increase in revenues to $267 million beating the consensus by a couple million and adjusted EPS of $0.18 was up 157%, also beating expectations by $.03. However, management also gave some cautionary notes on some headwinds in Q4.

However, an upside EPS surprise of $.03 vs. the consensus allowed it to continue to guide to its earlier $1.28-$1.31 for the full year (FY1/19). I should note here that management tends to guide conservatively, having beaten estimates by 20%, 3%, 15% and 43% in the past 4 quarters.

While the company deferred on giving guidance on the year ahead (FY1/20) until its year end conference call in March, it did note that the new Pennsylvania distribution center (its second in Washington, DC) would weigh on Q4 due to $4 million of one-time start-up expenses.

While some investors took this all in and hit the exit button — tanking the stock to $20 in two days — on 12/10, two directors bellied up to the deep discount table and scarfed down 20,400 shares between them at around $21. And one of them also purchased 10,000 shares at $26.50 in late October.

On 12/10 the CFO also bought 4,993 shares at $20.28, and on 12/11 the CEO exercised an option to buy 20,000 shares at $9.73 and did notturn right around a sell them (as is often the case). And on 12/13 another director bought 22,500 shares at $21.13 ($475k). That’s 5 insiders buying $1.46 million!

Whether all the pain has been lashed out, I can’t say. But all this insider buying is certainly encouraging. So on the basis of HOME’s deep discount and the huge insider buying, the shares are a buy for longer term aggressiveinvestors.

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