83K Reasons To Be Bullish On Steel Connect Stock

STEEL PARTNERS HOLDINGS LP, Board Member at Steel Connect STCN, disclosed an insider purchase on June 20, based on a new SEC filing.

What Happened: LP made a significant move by purchasing 6,967 shares of Steel Connect as reported in a Form 4 filing with the U.S. Securities and Exchange Commission. The transaction's total worth stands at $83,666.

Steel Connect shares are trading up 0.24% at $12.52 at the time of this writing on Friday morning.

All You Need to Know About Steel Connect

Steel Connect Inc is a diversified holding company. The company's operating segment include Direct Marketing and Supply Chain. It generates maximum revenue from the Direct Marketing segment. Geographically, it derives a majority of revenue from the United States and also has a presence in China; Netherlands, and others. The company serves clients in various industries including consumer electronics, communications, computing, software, storage, and retail industries.

Breaking Down Steel Connect's Financial Performance

Decline in Revenue: Over the 3 months period, Steel Connect faced challenges, resulting in a decline of approximately -4.96% in revenue growth as of 30 April, 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 Industrials sector.

Insights into Profitability:

• Gross Margin: The company issues a cost efficiency warning with a low gross margin of 29.68%, indicating potential difficulties in maintaining profitability compared to its peers.

• Earnings per Share (EPS): The company excels with an EPS that surpasses the industry average. With a current EPS of 2.73, Steel Connect showcases strong earnings per share.

Debt Management: The company maintains a balanced debt approach with a debt-to-equity ratio below industry norms, standing at 0.24.

Understanding Financial Valuation:

• Price to Earnings (P/E) Ratio: Steel Connect's P/E ratio of 3.95 is below the industry average, suggesting the stock may be undervalued.

• Price to Sales (P/S) Ratio: With a higher-than-average P/S ratio of 2.07, Steel Connect's stock is perceived as being overvalued in the market, particularly in relation to sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): The company's EV/EBITDA ratio of 2.88 trails industry averages, indicating a potential disparity in market valuation that could be advantageous for investors.

Market Capitalization Analysis: Below industry benchmarks, the company's market capitalization reflects a smaller scale relative to peers. This could be attributed to factors such as growth expectations or operational capacity.

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Why Insider Transactions Are Important

Insider transactions contribute to decision-making but should be supplemented by a comprehensive investment analysis.

Within the legal framework, an "insider" is defined as any officer, director, or beneficial owner holding more than ten percent of a company's equity securities as per Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and major hedge funds. These insiders are mandated to disclose their transactions through a Form 4 filing, to be submitted within two business days of the transaction.

The initiation of a new purchase by a company insider serves as a strong indication that they expect the stock to rise.

However, insider sells may not always signal a bearish view and can be influenced by various factors.

The Insider's Guide to Important Transaction Codes

Examining transactions, investors often concentrate on those unfolding 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 Steel Connect's Insider Trades.

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