Insider Buying: Deutz AG’s Chairman Buys More Stock

Top-level insiders such as CEOs and Chairmen tend to have a good understanding of their companies’ operating activities. If they’re buying company stock, it’s often a sign that the outlook for the business, and the share price, is attractive.

In this report, we are going to highlight a large stock purchase from a top-level insider at Deutz AG (DEZ:GR). Deutz is an independent provider of diesel, gas, and electric engines that is based in Germany. The world’s oldest engine company, manufactures engines for a broad range of markets including the agriculture, construction, and automotive industries. The company is listed on Deutsche Börse’s Xetra and currently has a market capitalization of nearly €709 million.

Insider Buying at DEUTZ AG

Our data shows that on April 3, Deutz’s Chairman of the Management Board Dr. Sebastian Schulte purchased 28,000 shares at a price of €5.92 per share. This trade cost the insider €165,760 and increased his holding to 93,000 shares.

Well-timed Purchases

This insider activity is worth highlighting for several reasons.

Firstly, Dr. Schulte has made well-timed purchases in the recent past. At the end of Jan, he snapped up 20,000 Deutz shares at a price of €4.98 per share – roughly 18% below the current share price. He also bought 20,000 shares last May at a price of €4.12 per share.

Secondly, he has made a substantial purchase here that has increased the size of his holding by 43%.

Third, Dr. Schulte has a financial background. Previously, he worked in the areas of mergers & acquisitions and investment controlling at ThyssenKrupp AG. Before joining ThyssenKrupp, he obtained a Doctorate in Finance & Accounting from the University of Cambridge. Given his background, he is likely to have a good understanding of Deutz’s investment potential.

Strong Growth Ahead

Deutz recently posted an excellent set of results for 2022.

For the year, revenue climbed 20.8% to €1.95 billion. Meanwhile, profitability improved significantly, with EBIT before exceptional items more than doubling year on year to reach €89.4 million and EBIT margin before exceptional items rising to 4.6% from 2.3%.

Looking ahead, management is confident that it can further increase sales and profitability. It believes its ‘Dual+’ strategy – which encompasses both the optimization of its existing core business in internal combustion engines and the development of new zero-emission products – will enable it to generate a 30% increase in revenue by 2025 along with an EBIT margin of 6-7%.

“The shift to greener drive systems represents a huge business opportunity for us,” commented Dr. Schulte.

In light of this attractive outlook, we see the insider buying here as a bullish development.