Why Are These 3 Companies’ Insiders Dumping Shares?

Let’s wrap up our discussion by investigating the insider selling registered at Illinois Tool Works Inc. (NYSE:ITW). Director Kevin M. Warren discarded 5,500 shares on Monday at a price of $89.54 per share and currently owns 4,560 shares. The company has seen another insider sell shares since the beginning of the year, but the sale was made in connection with newly-exercised stock options.

The shares of the industrial giant have managed to recover from the severe pullback they experienced during the first two weeks of January, thanks to the company’s encouraging financial results for the fourth quarter, released towards the end of January. The multi-industry company reported operating revenue of $13.41 billion for 2015, down from $14.48 billion reported for the prior year. Its net income decreased to $1.90 billion from $2.95 billion reported for 2014. Even so, Illinois Tool Works expanded its operating margin by 150 basis points last year, to 21.4%. Let us remind you that the company started a five-year plan in 2012 to make the most of its business potential, setting particular performance goals such as achieving organic growth of 200 basis points above the global GDP and reaching an operating margin of roughly 23% by the end of 2017. Meanwhile, the company’s management anticipates 2016 full-year earnings per share in the range of $5.35 to $5.55, which would denote an increase of 6% year-over-year at the midpoint. Similarly, the organic revenue growth is estimated to be in the range of 1% to 3%. Ric Dillon’s Diamond Hill Capital owns 2.02 million shares of Illinois Tool Works Inc. (NYSE:ITW) as of the end of 2015.

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