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Insiders Are Buying MRC Global

August 22, 2013 | About:
Markus Aarnio

Markus Aarnio

1 followers
The iShares Dow Jones U.S. Industrial Sector Index ETF (IYJ) was trading as low as $28.58 in March 2009. The index is currently trading at $87.04 or 204.5% above the low made in March 2009.

398827-13771022716032448-Markus-Aarnio.p(click to enlarge)

In this article, I will feature one industrial goods company that has seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.

  2. The stock is sold by no insiders in the month of intensive purchasing.

  3. At least two purchasers increase their holdings by more than 10%.
MRC Global (MRC) distributes pipes, valves, and fittings (PVF), and related products and services to the energy industry worldwide. MRC Global has underperformed the iShares Dow Jones U.S. Industrial Sector Index ETF this year.

398827-13770893028259883-Markus-Aarnio.p(click to enlarge)

Insider Buying by Insider (Last 30 Days)

  • Daniel Churay purchased 550 shares on Aug. 16 and currently holds 550 shares or less than 0.1% of the company. Daniel Churay has served as the company's executive vice president corporate affairs, general counsel and corporate secretary since May 2012.
  • Rory Isaac purchased 5,000 shares on Aug. 12 and currently holds 62,861 shares or less than 0.1% of the company. Rory Isaac has served as executive vice president, international operations since June 2013.
  • James Braun purchased 4,000 shares on Aug. 12 and currently holds 16,666 shares or less than 0.1% of the company. James Braun has served as executive vice president and chief financial officer since November 2011.
Insider Buying by Calendar Month

Here is a table of MRC Global's insider-trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
August 20139,5500
July 201300
June 201310,0000
May 201300
April 201300
March 20136,04926,450,000
There have been 25,599 shares purchased and there have been 26,450,000 shares sold by the insiders since March 2013.

Financials

The company reported the second-quarter financial results on August 1 with the following highlights:

Revenue$1.3 billion
Net income$43.9 million
Cash$37.8 million
Debt$1.1 billion


Outlook


The company's full year 2013 guidance is as follows:

Revenue$5.1-$5.3 billion
Adjusted EBITDA$385-$415 million
Diluted EPS$1.65-$1.85


Competition


MRC Global's competitors include W.W. Grainger (GWW). Here is a table comparing these two companies.



CompanyMRCGWW
Market Cap:2.60B17.41B
Employees:4,81021,100
Qtrly Rev Growth (yoy):-0.110.06
Revenue:5.33B9.17B
Gross Margin:0.190.44
EBITDA:474.03M1.39B
Operating Margin:0.080.13
Net Income:139.13M728.94M
EPS:1.3710.29
P/E:18.8024.36
PEG (5 yr expected):0.851.47
P/S:0.501.90
MRC Global's P/S ratio is below its direct competitor's. W.W. Grainger has seen 20 insider sell transactions this year.

Conclusion

There have been three different insiders buying MRC Global and there have not been any insiders selling MRC Global during the last 30 days. Two out of these three insiders increased their holdings by more than 10%. MRC Global has an insider ownership of 0.60%. There are nine analyst buy ratings, three neutral ratings and one sell rating with an average target price of $30.06. MRC Global is trading at a P/E ratio of 18.80 and a forward P/E ratio of 12.63. MRC Global has a book value of $12.40 per share. I have a cautiously bullish bias for the stock currently based on the intensive insider buying.

Disclosure: I have no positions in any stocks mentioned.

About the author:

Markus Aarnio
I have 15 years of investing experience. I have traded stocks, commodities and Forex markets.

Rating: 3.0/5 (5 votes)

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