The S&P/ASX 200 Index (ASX: XJO) stock Bapcor Ltd (ASX: BAP) has seen plenty of volatility over the past year. Could some insider buying by directors be a promising signal for investors?
For investors that haven't heard of Bapcor, it's one of the largest auto parts businesses in the Asia Pacific region. It owns a number of different businesses in its portfolio including Burson Auto Parts, Truckline, WANO, Autobarn, Autopro, Midas, ABS, Shock Shop and Battery Town.
After the company's recent FY23 half-year result, directors have been buying.
Insider buying
The latest purchase by a director was Mark Bernhard who bought 10,000 shares on the market, at a price of $6.63 per share.
Director Kate Spargo bought 10,000 shares for an average price of $6.475 per share on the market.
The director Brad Soller bought 7,500 shares on the market for a price of $6.66 per share.
Director Margaret Haseltine bought 7,515 shares for a price of $6.65 per share.
Earnings recap
Bapcor recently reported its half-year result for the six months to 31 December 2022.
The ASX 200 stock achieved record revenue, with growth of 11.2% to $1 billion – there was "strong growth in all Australian segments."
The company said that the first half of FY23 demonstrated the "resilience of Bapcor's diversified business model", with an ongoing focus on capital efficiency with actions implemented to enhance cash conversion.
It said that there was continued network expansion and growth in proportion to own-brand sales across all of its segments. The ASX 200 stock also said that the distribution centre in Queensland is on track for practical completion in the second half of FY23.
Bapcor reported that its pro-forma net profit after tax (NPAT), or the underlying net profit, increased by 2.3% to $62 million.
In terms of an outlook, the ASX 200 stock said it expects a "solid underlying performance in FY23 with slight improvements" in trading in the second half of FY23, compared to the first half of FY23. But, it also said that more progress is required to further reduce Bapcor's still-elevated inventory levels.
The business expects to keep growing its network in the coming years, which can help grow its scale and profitability. That could help the Bapcor share price in time too.
Bapcor share price valuation
According to Commsec, Bapcor shares are valued at 18 times FY23's estimated earnings.
