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Investors Sing “Happy, Happy, Joy, Joy” Over Joy Global Insider Buys

On a mixed day for markets, shareholders of mining equipment maker Joy Global (NYSE:JOY) were jumping for… well, for joy Tuesday, over news that the company’s top two corporate officers have both begun buying shares.

Specifically, on June 5, it’s now been reported, both company CEO Ed Doheny and CFO James Sullivan made sizeable stock purchases — 7,750 shares for the former, and 4,000 shares for the latter.

Relatively speaking, both purchases added only modestly to the executives’ stakes, of course. Doheny now owns 95,485 shares of Joy Global, while his CFO owns 25,949. What may (or may not) be more significant is that the combined purchases of these two company insiders amount to about seven times the total number of shares purchased by Joy Global insiders over the past three months.

Indeed, insider transactions at Joy have looked pretty positive for quite some time now, with not a single insider sale recorded since March. And even if you draw back to look at 12-month trends, you’ll find open-market insider purchases of Joy shares vastly outnumbering insider sales, with 33,236 more shares bought than sold over the past year.

But does this mean you, too, should dive back into Joy Global?

What does it mean to you?
Well, not necessarily. While at today’s valuation of just 13 times earnings Joy shares hardly look expensive, this valuation has resulted from a steep 40% slide in the price of the shares over the past year. The implication being that all those insider purchases over the past 12 months… are currently underwater.

The good news is that analysts who follow Joy Global stock, however, are now broadly positive on its prospects, and expect to see earnings grow in the neighborhood of 7% annually over the next five years. That’s not a huge amount of growth to support a 13-times-earnings valuation — but at least it’s positive. And after watching Joy Global earnings slide by an average of 11% annually over the past five years (according to Yahoo! Finance data), any positive news at all has to be a nice change.

Add in the fact that Joy Global pays its shareholders a modest 2% dividend for their patience, as it turns earnings around, and maybe now’s the time to take a cue from the insiders, and begin dipping your toe back into Joy’s happy waters.


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