Image source: Getty Images <\/p>\n
It\u2019s no secret that the Rolls-Royce<\/strong> (LSE: RR.) share price is flying right now. This year, it\u2019s up about 90%.<\/p>\n I think it may be able to keep rising in the near term too. Because I just spotted a really bullish insider transaction here.<\/p>\n I always keep an eye on insider stock purchases and sales (\u2018director dealing\u2019). Because company insiders tend to have far more information on their businesses than the rest of us.<\/p>\n If they\u2019re buying a ton of company shares, it\u2019s generally a bullish signal. After all, no one buys company stock if they expect it to fall.<\/p>\n Now, zooming in on Rolls-Royce, there was a substantial stock purchase from board member Paulo Cesar Silva recently. On 8 October, he bought 41,780 shares at a price of \u00a311.62 per share (about 2% above the current share price).<\/p>\n This trade cost him around \u00a3485,400. That\u2019s a relatively large trade and it suggests he\u2019s quite confident the share price is going higher.<\/p>\n Of course, insiders don\u2019t always get it right. Like the rest of us, they can make ill-timed stock purchases.<\/p>\n But here\u2019s the thing. Silva has significant experience in the aerospace industry.<\/p>\n Previously, he worked at Embraer \u2013 the third largest commercial jets manufacturer \u2013 for over 25 years where he was president & CEO of the commercial aviation division before becoming president and CEO of the group in 2016.<\/p>\n Given this background, he\u2019s likely to have a very good understanding of Rolls-Royce\u2019s core business (maybe performance here\u2019s going to be better than expected?).<\/p>\n One other thing worth mentioning is that he has considerable finance experience having spent his early career in senior finance roles. Therefore, he most likely knows his way around a balance sheet and income statement.<\/p>\n Combine the size of the purchase with his industry experience and we have a rather \u2018informative\u2019 trade, if you ask me. This isn\u2019t just a random board member buying a handful of shares.<\/p>\n Having said that, I\u2019m not going to blindly follow Silva into Rolls-Royce shares. To my mind, the valuation\u2019s a little on the high side right now.<\/p>\n Currently, the forward-looking price-to-earnings (P\/E) ratio using next year\u2019s earnings forecast (32.8p per share) is about 34. That\u2019s a higher multiple than I\u2019m prepared to pay for this company.<\/p>\n I could probably justify a P\/E ratio in the mid-20s (almost twice the UK market average) given Rolls-Royce\u2019s growth potential in areas like defence and nuclear energy. But given risks around supply chain issues and product setbacks, I can\u2019t get to 34.<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: Getty Images It\u2019s no secret that the Rolls-Royce (LSE: RR.) share price is flying right now.…\n","protected":false},"author":2,"featured_media":511423,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,4],"tags":[748,167266,167267,393,4884,167265,1144,167262,1678,712,48505,167264,167263,16,15,1764],"class_list":{"0":"post-511422","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uk","8":"category-united-kingdom","9":"tag-britain","10":"tag-bullish-signal","11":"tag-company-shares","12":"tag-england","13":"tag-great-britain","14":"tag-insider-transaction","15":"tag-northern-ireland","16":"tag-paulo-cesar-silva","17":"tag-rolls-royce","18":"tag-scotland","19":"tag-share-price","20":"tag-stock-purchase","21":"tag-stock-purchases","22":"tag-uk","23":"tag-united-kingdom","24":"tag-wales"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115399750104965338","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/511422","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=511422"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/511422\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/511423"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=511422"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=511422"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=511422"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}