On November 6, a recent SEC filing unveiled that Thomas St. Dennis, Director at FormFactor FORM made an insider sell.

What Happened: Dennis’s decision to sell 3,100 shares of FormFactor was revealed in a Form 4 filing with the U.S. Securities and Exchange Commission on Wednesday. The total value of the sale is $121,233.

As of Thursday morning, FormFactor shares are up by 1.01%, currently priced at $42.02.

All You Need to Know About FormFactor

FormFactor Inc designs, develops, manufactures, sells, and supports semiconductor probe card products. The company operates in two reportable segments namely Probe Cards Segment and the Systems Segment. Sales of probe cards and analytical probes are included in the Probe Cards Segment, while sales of probe stations and thermal sub-systems are included in the Systems Segment. Probe cards generate the maximum revenue from its operations. It offers multiple product lines which include analytical probes, probe stations, thermal sub-systems, and related services.

Financial Milestones: FormFactor’s Journey

Revenue Growth: FormFactor’s remarkable performance in 3 months is evident. As of 30 September, 2024, the company achieved an impressive revenue growth rate of 21.18%. This signifies a substantial increase in the company’s top-line earnings. As compared to competitors, the company surpassed expectations with a growth rate higher than the average among peers in the Information Technology sector.

Profitability Metrics:

• Gross Margin: The company shows a low gross margin of 40.74%, indicating concerns regarding cost management and overall profitability relative to its industry counterparts.

• Earnings per Share (EPS): FormFactor’s EPS is below the industry average. The company faced challenges with a current EPS of 0.24. This suggests a potential decline in earnings.

Debt Management: With a below-average debt-to-equity ratio of 0.04, FormFactor adopts a prudent financial strategy, indicating a balanced approach to debt management.

Assessing Valuation Metrics:

• Price to Earnings (P/E) Ratio: FormFactor’s P/E ratio of 24.05 is below the industry average, suggesting the stock may be undervalued.

• Price to Sales (P/S) Ratio: The Price to Sales ratio is 4.41, which is lower than the industry average. This suggests a possible undervaluation based on sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): Indicated by a lower-than-industry-average EV/EBITDA ratio of 18.51, the company suggests a potential undervaluation, which might be advantageous for value-focused investors.

Market Capitalization Analysis: The company’s market capitalization is below the industry average, suggesting that it is relatively smaller compared to peers. This could be due to various factors, including perceived growth potential or operational scale.

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Why Insider Transactions Are Key in Investment Decisions

Investors should view insider transactions as part of a multifaceted analysis and not rely solely on them for decision-making.

From a legal standpoint, the term “insider” pertains to any officer, director, or beneficial owner holding more than ten percent of a company’s equity securities as outlined in Section 12 of the Securities Exchange Act of 1934. This encompasses executives in the c-suite and significant hedge funds. These insiders are mandated to inform the public of their transactions through a Form 4 filing, to be submitted within two business days of the transaction.

A company insider’s new purchase is a indicator of their positive anticipation for a rise in the stock.

While insider sells may not necessarily reflect a bearish view and can be motivated by various factors.

Essential Transaction Codes Unveiled

Investors prefer focusing on transactions that take place in the open market, indicated in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S indicates a sale. Transaction code C indicates the conversion of an option, and transaction code A indicates grant, award or other acquisition of securities from the company.

Check Out The Full List Of FormFactor’s Insider Trades.

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This article was generated by Benzinga’s automated content engine and reviewed by an editor.