Chief Executive Officer At Cricut Sells $1.04M Of Stock

Arora Ashish, Chief Executive Officer at Cricut CRCT, executed a substantial insider sell on August 13, according to an SEC filing.

What Happened: Ashish's recent Form 4 filing with the U.S. Securities and Exchange Commission on Tuesday unveiled the sale of 171,424 shares of Cricut. The total transaction value is $1,044,455.

Monitoring the market, Cricut's shares down by 0.16% at $6.09 during Wednesday's morning.

Get to Know Cricut Better

Cricut Inc designs and builds a creativity platform that enables users to turn ideas into professional-looking handmade goods. With its connected machines, design apps and accessories, and materials, the users create everything from personalized birthday cards, mugs, and T-shirts to large-scale interior decorations. It derives revenues from three segments including the Connected machines engaged in the sale of its connected machine hardware and related essential software, the Subscriptions segment provides monthly and annual subscription fees, and the Accessories and Materials segment provides craft, DIY, home decor products and heat presses including the Cricut EasyPress, Cricut Mug Press, and Cricut Autopress.

Understanding the Numbers: Cricut's Finances

Negative Revenue Trend: Examining Cricut's financials over 3 months reveals challenges. As of 30 June, 2024, the company experienced a decline of approximately -5.52% in revenue growth, reflecting a decrease in top-line earnings. In comparison to its industry peers, the company trails behind with a growth rate lower than the average among peers in the Consumer Discretionary sector.

Analyzing Profitability Metrics:

• Gross Margin: The company sets a benchmark with a high gross margin of 53.49%, reflecting superior cost management and profitability compared to its peers.

• Earnings per Share (EPS): With an EPS below industry norms, Cricut exhibits below-average bottom-line performance with a current EPS of 0.09.

Debt Management: The company maintains a balanced debt approach with a debt-to-equity ratio below industry norms, standing at 0.03.

Evaluating Valuation:

• Price to Earnings (P/E) Ratio: Cricut's P/E ratio of 19.68 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 1.8, Cricut'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 7.75 trails industry averages, indicating a potential disparity in market valuation that could be advantageous for investors.

Market Capitalization Analysis: Falling below industry benchmarks, the company's market capitalization reflects a reduced size compared to peers. This positioning may be influenced by factors such as growth expectations or operational capacity.

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Why Insider Transactions Are Important

While insider transactions should not be the sole basis for making investment decisions, they can play a significant role in an investor's decision-making process.

In legal terms, an "insider" refers to any officer, director, or beneficial owner of more than ten percent of a company's equity securities registered under Section 12 of the Securities Exchange Act of 1934. This can include executives in the c-suite and large hedge funds. These insiders are required to let the public know of their transactions via a Form 4 filing, which must be filed within two business days of the transaction.

When a company insider makes a new purchase, that is an indication that they expect the stock to rise.

Insider sells, on the other hand, can be made for a variety of reasons, and may not necessarily mean that the seller thinks the stock will go down.

Understanding Crucial Transaction Codes

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 Cricut's Insider Trades.

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