Jian James Huang, EVP at Adient ADNT, reported an insider sell on November 20, according to a new SEC filing.

What Happened: Huang’s recent move involves selling 3,017 shares of Adient. This information is documented in a Form 4 filing with the U.S. Securities and Exchange Commission on Wednesday. The total value is $59,585.

At Thursday morning, Adient shares are down by 0.94%, trading at $18.88.

Discovering Adient: A Closer Look

Adient began trading Oct. 31, 2016, when Johnson Controls spun off its automotive experience segment into this new company. Adient is the leading seating supplier to the industry with about one third of the global market. Its share in China is now nearly 20%, down from about 45%, following the sale of its main joint venture there at the end of fiscal 2021. Unconsolidated seating revenue from joint ventures after factoring in the sale was about $3.8 billion in fiscal 2023 and consolidated China revenue was $1.4 billion. The company is headquartered in Ireland but has corporate offices in the Detroit area. Fiscal 2023 (Sept. 30 year-end) consolidated revenue, which excludes joint venture sales, was $15.4 billion and fiscal 2024 is forecast to about $14.6 billion.

A Deep Dive into Adient’s Financials

Decline in Revenue: Over the 3 months period, Adient faced challenges, resulting in a decline of approximately -4.48% in revenue growth as of 30 September, 2024. This signifies a reduction in the company’s top-line earnings. As compared to its peers, the revenue growth lags behind its industry peers. The company achieved a growth rate lower than the average among peers in Consumer Discretionary sector.

Analyzing Profitability Metrics:

• Gross Margin: The company faces challenges with a low gross margin of 6.88%, suggesting potential difficulties in cost control and profitability compared to its peers.

• Earnings per Share (EPS): Adient’s EPS reflects a decline, falling below the industry average with a current EPS of 0.918605.

Debt Management: Adient’s debt-to-equity ratio is notably higher than the industry average. With a ratio of 1.13, the company relies more heavily on borrowed funds, indicating a higher level of financial risk.

Navigating Market Valuation:

• Price to Earnings (P/E) Ratio: Adient’s current Price to Earnings (P/E) ratio of 95.3 is higher than the industry average, indicating that the stock may be overvalued according to market sentiment.

• Price to Sales (P/S) Ratio: With a P/S ratio of 0.12 below industry standards, the stock shows potential undervaluation, making it an appealing investment option for those focusing on sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): Adient’s EV/EBITDA ratio, lower than industry averages at 4.69, indicates attractively priced shares.

Market Capitalization: Indicating a reduced size compared to industry averages, the company’s market capitalization poses unique challenges.

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The Importance of Insider Transactions

Insider transactions serve as a piece of the puzzle in investment decisions, rather than the entire picture.

Exploring the legal landscape, an “insider” is defined as any officer, director, or beneficial owner holding more than ten percent of a company’s equity securities, as stipulated by Section 12 of the Securities Exchange Act of 1934. This encompasses executives in the c-suite and major hedge funds. These insiders are required to report their transactions through a Form 4 filing, which must be submitted within two business days of the transaction.

Highlighted by a company insider’s new purchase, there’s a positive anticipation for the stock to rise.

But, insider sells may not necessarily indicate a bearish view and can be motivated by various factors.

Unlocking the Meaning of Transaction Codes

When dissecting transactions, the focal point for investors is often those occurring in the open market, meticulously detailed in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C indicates the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

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

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