The WiseTech Global Ltd (ASX: WTC) share price is up 4% today despite the software-as-a-service logistics business releasing no specific news to the market.
In fact the only news to come out the Alexandria-based group recently is the decision by one of its insiders (a director) to sell 100,000 shares at $18.36 each on December 20, 2018. Of course insiders can sell for many reasons, but generally it's a negative sign for a business's valuation at a minimum when a director chooses to sell down heavily.
WiseTech shares have more than quadrupled over the past 5 years on the back of some decent organic growth, hype, and an aggressive acquisitions strategy.
The group posted a profit of $40.8 million in FY 2018 on earnings per share of 13.9 cents that were up 28%.
It also has around $122 million in cash on hand to give it an enterprise value over $5 billion based on today's share price of $16.90, which is around 121x trailing earnings per share.
Even with guidance for revenue growth of 44% to 50% in FY 2019 and EBITDA growth of $31% to 37% to land between $102 million to $107 million it's not hard to see why an insider decided to sell down with hype driving the stock to around 50x forward EV/EBITDA.
WiseTech does have some high margins, and an incredible amount of recurring revenue but I'm not buyer of shares on valuation grounds alone.
Notably, today it was revealed that one of WiseTech's software-as-a-service rivals in Altium Limited (ASX: ALU) had an insider buying US$100,000 worth of stock on December 28 and the opposite moves of directors may be an insight as to which way these two growth stars' share prices may move in 2019.
