FormFactor Director Sells Shares Amid Insider Sales Trend

Dennis St, a Director at FormFactor Inc, sold 2,000 shares of the company at $56.3 per share on May 10, 2024. This transaction is part of a larger trend of 13 insider sells over the past year, with no insider buys.

Aqsa Younas Rana
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FormFactor Director Sells Shares Amid Insider Sales Trend

FormFactor Director Sells Shares Amid Insider Sales Trend

On May 10, 2024, Dennis St, a Director at FormFactor Inc (NASDAQ: FORM), sold 2,000 shares of the company at a price of $56.3 per share. This transaction was filed with the Securities and Exchange Commission (SEC) on the same day.

The sale is part of a larger trend of insider sales at FormFactor, with 13 insider sells recorded over the past year and no insider buys. This suggests that insiders may perceive the stock's current valuation as high relative to its intrinsic value. According to GuruFocus, the intrinsic value of FormFactor is estimated at $33.43 per share, making the stock significantly overvalued with a price-to-GF-Value ratio of 1.68.

Why this matters: This trend of insider sales could be a warning sign for investors, as it may indicate that the company's current valuation is unsustainable. If the stock price corrects to its intrinsic value, investors who bought at the current price could face significant losses.

FormFactor, headquartered in Livermore, California, is a leading provider of essential test and measurement technologies along the full IC life cycle. The company operates in a highly specialized segment of the semiconductor industry and has a market capitalization of approximately $4.25 billion.

Shares of FormFactor were trading at $56.3 on the day of the sale. The company's price-earnings ratio stands at 41.68, which is above both the industry median of 31.1 and FormFactor's historical median. Over the past year, St has sold a total of 5,792 shares and has not purchased any shares.

The recent transaction by Director Dennis St, selling 2,000 shares at $56.3 per share, continues the trend of insider sales at FormFactor. With the stock trading significantly above its estimated intrinsic value and insiders selling shares over the past year, the market may be overvaluing FormFactor's current prospects. However, as a leading provider in the specialized semiconductor testing segment, FormFactor's long-term potential remains noteworthy for investors.

Key Takeaways

  • Dennis St, FormFactor Director, sold 2,000 shares at $56.3 each on May 10, 2024.
  • 13 insider sells, no buys, in the past year, suggesting overvaluation.
  • Intrinsic value estimated at $33.43, making the stock 68% overvalued.
  • FormFactor's price-earnings ratio is 41.68, above industry and historical medians.
  • Insider sales may indicate unsustainable valuation, posing risk to investors.