This FTSE 100 dividend stock just fell 26% and directors are loading up on its shares

Final Wednesday (16 April), FTSE 100 dividend stock Bunzl (LSE:BNZL) fell a whopping 26%. The transfer got here after the distribution and outsourcing firm – which previously was fairly a dependable performer – introduced that it was reducing its 2025 outlook and pausing its share buyback programme.

Now, what’s attention-grabbing is that instantly after the share worth fall, a number of directors purchased stock. Might this sign that there’s a possibility for buyers right here proper now?

Analysing insider transactions

Analysis has proven that insider transactions can present worthwhile buying and selling indicators. Nevertheless, not all insider trades are created equal. For these thinking about following such transactions in an effort to establish enticing funding alternatives, there are just a few issues to search for.

One is massive buys from top-tier insiders. Typically talking, top-level insiders have extra information of their firms than these decrease down the hierarchy. If these insiders are spending plenty of their very own cash on firm stock, it’s a very good signal.

One other factor to search for is ‘cluster shopping for’. This is the place three or extra insiders are shopping for stock concurrently. This signifies that there’s a consensus throughout the firm that the stock’s low cost.

Bullish shopping for

Zooming in on the director transactions at Bunzl, they appear attention-grabbing to me. On the identical day the share worth crashed, three directors stepped up to purchase and they went in aggressively.

CEO Frank van Zanten purchased 47,655 shares, spending about £1.1m on stock. In the meantime, CFO Richard Howes snapped up 8,479 shares, in a commerce price about £200,000. And UK and Eire finance director Andrew Mooney additionally obtained in on the motion, shopping for 5,000 shares in a commerce price about £120,000.

General, I see this buying and selling exercise as bullish. All three are more likely to have a very good understanding of the corporate’s prospects, and they’ve put a good bit of their very own cash to work.

Digging deeper

After all, an investor ought to by no means decide based mostly purely on insider transactions. It’s necessary to have a look at what’s going on.

On this case, Bunzl stated that its North American enterprise – which primarily caters to meals service and grocery prospects – was seeing ‘income softness’ and that this was hitting working margins. It added that it was anticipating ‘reasonable’ income development in 2025 at fixed alternate charges – pushed by introduced acquisitions and broadly flat underlying income – with a bunch working margin of just under 8%, in comparison with 8.3% in 2024.

Nevertheless, it additionally stated that it had made some strikes to enhance efficiency within the US, together with making management modifications to make sure there’s a spotlight on industrial agility and operational excellence. It believes it will ship a stronger and extra sustainable platform for long-term worthwhile development.

“My confidence within the group’s compounding development technique and resilient enterprise mannequin stays unchanged, supported by our steady focus on enhancing our providing to prospects,” commented van Zanten.

Price contemplating?

In mild of the truth that the corporate’s making strikes to enhance its efficiency, and that administration’s nonetheless assured in regards to the future, I believe Bunzl shares are price contemplating right now.

Additional challenges within the US are a threat within the close to time period nevertheless, with the shares now buying and selling on a trailing price-to-earnings (P/E) ratio of lower than 15 and sporting a dividend yield of round 3.4%, I believe they’ve the potential to do effectively in the long term.