Allan Merrill, President and CEO of Beazer Homes (BZH), recently bought 5,000 shares. The buy increased his position by less than 1%, and came to a total cost of $109,150.
He was joined by the company’s general council, who bought 449 shares for just over $10,000, and a company director purchased 22,500 shares for a massive $510,379 in total. Insiders were slight sellers of shares last year when Beazer stock traded at a higher price.
Overall, Beazer Homes insiders own 6.2% of shares.
The homebuilder’s shares have slid 22% over the past year, as high mortgage rates have kept the home market largely frozen. While Beazer saw revenues rise by 4% in the last 12 months, higher costs and slower sales resulted in a 38% drop in earnings.
Even with the drop in shares, Beazer trades like a value play at about 5 times earnings, and with shares trading at less than 0.6 times their book value.
Action to take: Value investors may like shares here, as there’s likely some upside if interest rates start to trend lower. While Beazer doesn’t pay a dividend, the company has started to accelerate a plan to buy back shares.
For traders, the May $25 calls, last trading for about $1.55, could see mid-double-digit returns from a bounce higher over the coming months.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.