Why Are These 3 Companies’ Insiders Dumping Shares?

Brinker International Inc. (NYSE:EAT) also had two insiders offload shares earlier this week. To start with, Director George R. Mrkonic Jr. discarded 5,584 shares on Tuesday at a weighted average price of $46.98, cutting his total stake to 29,406 shares. Executive Vice President and Chief Development Officer Roger F. Thomson sold an 11,460-share block on the same day, at prices varying from $46.50 to $46.56 per share, trimming his overall holding to 93,952 units of common stock.

The shares of the owner and franchisor of the Chili’s Grill & Bar and Maggiano’s Little Italy restaurant brands are down by 22% over the past 12-month period, so the recent insider selling at the company might take some investors by surprise. However, these insiders might have waited for the waiver of trading restrictions so as to raise some cash for personal needs, so one should be careful when analyzing such activity. Just recently, Brinker International reported total revenue of $1.55 billion for the 26-week period that ended December 23, which denoted an increase of 6.7% year-over-year. The increase was mainly attributable to higher restaurant capacity from the acquisition of Pepper Dining, which more than offset the negative comparable restaurant sales. The company blames the toughening competition and heavy discounting in the casual dining industry for the slumping growth in sales and traffic. Specifically, Brinker’s management believes that the slow wage growth stands behind the declining restaurant visits. Nonetheless, the company’s Board recently increased its quarterly dividend payment by 14% to $0.32 per share, which might serve as bait for some investors. Most importantly, the stock has a forward P/E multiple of 11.71 and looks extremely cheap relative to the restaurants industry, which has a forward P/E of 24.40. David Harding’s Winton Capital Management sold off its entire 505,821-share stake in Brinker International Inc. (NYSE:EAT) during the final quarter of 2015.