Lands' End, Inc. (LE): Insider Buying at Full Value?

Consumer confidence might be riding a six-year high, but boardroom confidence appears to be slipping. (Joe and Jane sixpacks are always lagging indicators) The number of companies reporting insider purchases dropped to just 31 last week. It's the skinniest list iStock has seen in months and months.

We hope the lack of buying is not a sign that main street confidence is not misplaced.

Finding an insider buying idea was difficult this week. So, we'll highlight the name that makes us the least uncomfortable.

Two directors and a beneficial owner (10% or more) of Lands' End, Inc. (LE) opened their checkbooks and signed on the bottom line last week.

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Lands' End operates as a multi-channel retailer primarily in the United States, Europe, and Asia. The company operates through two segments, Direct and Retail. It offers men's, women's, and kids? apparel, outerwear, and swimwear; specialty apparel; accessories; footwear; and home products. The company sells its products through e-commerce Websites, direct mail catalogs, phone, or in-store computer kiosks, as well as standalone and dedicated stores.

Directors, Jonah Staw and Josephine Linden purchased 1,500 and 3,000 shares, respectively. Staw bought at $32.83 for an investment of $49,245, and Linden at $30.83 for $92,490.

Meanwhile, beneficial owner, Edward Lampert bought 187,534 shares, reported on June 16th. The day low was $30.83, which would equal $5,781,673; a substantial buy. It's called cluster buying when multiple insiders purchase simultaneously.

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Because LE is recent spinoff from Sears Holdings Corporation (SHLD), a previous history of "getting right" is not available, but Lampert's insider record consists of sale after sale after sale after… so, the buy stands in stark contrast to his typical trading action.

One analyst forecasts earnings per share of $2.29 on $1.59 billion in sales. The average retailer trades at 12.69 times profits and 0.66 times sales. Apply those valuations to Lands' End, and price targets of $29.06 and $32.84emerge, which makes one wonder why the triplet of insiders bought?

Overall: Cluster buying at Lands' End, Inc. (LE) is an encouraging sign, but shares appear fully-valued based on the industry average price-to-earnings and price-to-sales ratios.