Sell Alert: Sheri Rhodes Cashes Out $746K In FormFactor Stock

On May 8, a recent SEC filing unveiled that Sheri Rhodes, Board Member at FormFactor FORM made an insider sell.

What Happened: Rhodes's recent move involves selling 13,319 shares of FormFactor. This information is documented in a Form 4 filing with the U.S. Securities and Exchange Commission on Wednesday. The total value is $746,143.

In the Thursday's morning session, FormFactor's shares are currently trading at $56.14, experiencing a down of 0.0%.

Delving into FormFactor's Background

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.

FormFactor's Economic Impact: An Analysis

Revenue Growth: FormFactor's revenue growth over a period of 3 months has been noteworthy. As of 31 March, 2024, the company achieved a revenue growth rate of approximately 0.76%. This indicates a substantial increase in the company's top-line earnings. In comparison to its industry peers, the company stands out with a growth rate higher than the average among peers in the Information Technology sector.

Analyzing Profitability Metrics:

• Gross Margin: With a low gross margin of 37.18%, the company exhibits below-average profitability, signaling potential struggles in cost efficiency compared to its industry peers.

• Earnings per Share (EPS): FormFactor's EPS lags behind the industry average, indicating concerns and potential challenges with a current EPS of 0.28.

Debt Management: The company maintains a balanced debt approach with a debt-to-equity ratio below industry norms, standing at 0.05.

Financial Valuation Breakdown:

• Price to Earnings (P/E) Ratio: The current P/E ratio of 42.85 is below industry norms, indicating potential undervaluation and presenting an investment opportunity.

• Price to Sales (P/S) Ratio: A higher-than-average P/S ratio of 6.63 suggests overvaluation in the eyes of investors, considering sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): A high EV/EBITDA ratio of 32.06 positions the company as being more valued compared to industry benchmarks.

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 are not the sole determinant of investment choices, but they are a factor worth considering.

In the context of legal matters, the term "insider" refers to any officer, director, or beneficial owner holding more than ten percent of a company's equity securities, as outlined by Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and significant hedge funds. Such insiders are obligated to report their transactions through a Form 4 filing, which must be completed within two business days of the transaction.

Pointing towards optimism, a company insider's new purchase signals their positive anticipation for the stock to rise.

Despite insider sells not always signaling a bearish sentiment, they can be driven by various factors.

Important Transaction Codes

Navigating through the landscape of transactions, investors often prioritize those unfolding in the open market, precisely 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 signals 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 FormFactor's Insider Trades.

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