Insiders Like Maxim Integrated Products, Inc. (MXIM) — Should You?

The exact reason why investors have been taking down Maxim Integrated Products, Inc. (NASDAQ:MXIM) stock at a frenetic pace might seem like a bit of a head-scratcher at the moment, but that’s only if you are buying the stock for the wrong reasons. On 06 December, the shares dropped -0.34 points or -0.62 percent at $54.48 with a heavy trade volume of 6.178 million shares. After opening the session at $53.53, the shares went as high as $54.73 and as low as $53.5, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $15.2 billion and now has 278.05 million shares outstanding. Maxim Integrated Products, Inc. (MXIM) stock has gained 5.97 percent of market value in 21 trading days.

MXIM stock has a trailing 3-year beta of 1.3, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $2.68 a share in the trailing twelve months. The stock’s value has surged 4.21 percent year to date (YTD) against a rise of 5.5 percent in 12 month’s time. The company’s shares still trade -27.3 percent away from its 1-year high of $74.94 and 16.29 percent up from 52-week low of $46.85. The average consensus rating on the company is 2.7, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Maxim Integrated Products, Inc. (MXIM) will probably climb 2.24 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $63-month high price target. This represents a whopping 15.64 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $55.5, which represents a return potential of 1.87 percent when compared to the closing price of the stock of $54.48 on Thursday, December 06. The lowest price target for the stock is $44 — slightly more than -19.24 percent from MXIM’s current share price.

History has shown that shares in Maxim Integrated Products, Inc. have gone up on 24 different earnings reaction days and are predicted to add 0.03 percent when the company reports upcoming earnings. Investors will get their next glimpse of MXIM’s Q2 earnings on January 24. Analysts are forecasting revenue to suffer decline of -5.2 percent to $590M in the fiscal second quarter, while earnings are seen soaring by nearly -3.08 percent to $0.63 per share. It earned $0.75 per share, in line with the $0.75, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $638M, better than the $635M analysts expected. Earnings are estimated to increase by 26.6 percent this year, 7.87 percent next year and continue to increase by 13.6 percent annually for the next 5 years.

Let’s take a look at some insider activity at Maxim Integrated Products, Inc. (NASDAQ:MXIM) and see the pattern. The earliest insider trade took place on 12/03/2018. Doluca Tunc parted with a total of 7.5 thousand shares of company at average share price of $56.98. The total for the sales was set at $427.35 thousand. After this transaction, the PRESIDENT, CEO & DIRECTOR account balance stood at 1.51 million shares. The stock lost -4.39 percent since that insider sale. On 12/03/2018, Gagneja Sumeet, VP and Principal Acct Officer, sold 0.52 thousand shares at a price per share of $56.72. This removed 29.32 thousand shares from the insider’s fortune and the stock saw a -3.95 percent retreat in value since the news became public. This transaction left 10.2 thousand shares in the VP and Principal Acct Officer account.

On 12/03/2018, SENIOR VP and CFO Kiddoo Bruce E performed a sale transaction worth $1.41 million. This sale at $56.58 each has eliminated 25 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded -3.71 percent decrease since the transaction was reported. The insider now is left with 99.36 thousand shares remaining in the account. Doluca Tunc, who performs the PRESIDENT, CEO & DIRECTOR job, sold 2.5 thousand shares for $139.48 thousand. The disposal occurred on 11/27/2018 was priced at $55.79 per share. The share price plunged -2.35 percent since the reporting date. Doluca Tunc now left with a stake of 1.52 million MXIM stock worth $82.59 million after the insider selling.

The stock is currently hovering around the first support level of $53.74. Below this, the next support is placed in the zone of $53.01. Till the time, the MXIM stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 53.8 on daily chart, which may remain a cause for concern. If the price breaks below $53.01 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $54.97 mark may result into a pull-back move towards $55.47 level.

Shares of Maxim Integrated Products, Inc. (MXIM) are trading at a P/E ratio of 24.46 times earnings reported for the past 12 months. The industry MXIM operates in has an average P/E of 14.53. Its P/E ratio went as low as 18.34X and as high as 48.73 over the 5-year span.Further, it is sporting a 5.96 on the Price-to-Sales ratio. Compare this with the industry average P/S of 11.59. 66.2 percent is the gross profit margin for Maxim Integrated Products, Inc. and operating margin sits at 0 percent. Along with this, the net profit margin is 0 percent.