NNBR

NN Inc ($NNBR) Executives Execute $1.1M Cluster Buy Following 59% Stock Plunge

05/15/2025 01:17

As precision component manufacturer NN Inc ($NNBR) experiences a dramatic stock price decline in recent months, the company's top executives have initiated a notable cluster buying pattern, drawing significant market attention. According to SEC Form 4 filings disclosed on May 14, NN Inc's President Harold Bevis purchased approximately 50,000 shares over three consecutive days from May 12 to May 14. Specifically, he acquired 3,100 shares at $1.84 on May 12, followed by 1,584 shares at $2.14 on May 13, and 45,316 shares at $2.20 on May 14, investing a total of $108,698. During the same period, COO Timothy French purchased about 50,000 shares, while Director Jeri Harman acquired over 10,000 shares, demonstrating a coordinated insider buying signal. This significant executive purchasing activity comes immediately after NN Inc's stock price plummeted by more than 59% over the past six months. Notably, these purchases occurred just after the company reported its Q1 2025 results on May 7, which showed a 12.8% year-over-year revenue decline to $105.69 million and a loss of 3 cents per share, triggering further stock price deterioration. Headquartered in Charlotte, NN Inc manufactures high-precision components for the automotive, medical, and aerospace industries, operating through two primary segments: Mobile Solutions and Power Solutions. The company has reported consecutive quarters of revenue declines and net losses amid ongoing global supply chain challenges and a downturn in the automotive industry. In its Q1 2025 results, the company reported a net loss of $6.69 million, which represents a 59% improvement compared to the $16.4 million loss in the same period last year. Additionally, NN Inc secured new business awards totaling $16.4 million in Q1 and has accumulated over $150 million in new contracts since Q1 2023, potentially establishing a foundation for future performance improvement. It's worth noting that this May's cluster buying was preceded by earlier insider trading patterns. In August 2024, multiple directors including Joao Faria, Jeri Harman, Christina Carroll, and Raynard Benvenuti collectively purchased over 40,000 shares at prices ranging from $3.41 to $3.74. Conversely, on January 14, 2025, major shareholder Corre Partners Management sold over 427,000 shares at $4.09, realizing substantial gains. Analysts maintain a 'buy' rating on NN Inc, with a median price target of $6.50, more than 220% above the current trading price of $2.03. However, the market has consistently expressed disappointment in the company's underperformance through its share price. Industry experts observe that while NN Inc is gradually improving profitability through global supply chain optimization and cost reduction initiatives, additional measures are needed to drive revenue growth. The company plans to discuss its long-term strategies and performance objectives at a virtual investor day scheduled for August 2025, which should provide important insights into its future direction. Traditionally, insider purchases, especially by top executives, are interpreted as a strong signal reflecting management's conviction that the stock is undervalued. In NN Inc's case, this concentrated buying by company officers may indicate high confidence in the current business strategy and future outlook. However, investors should remain cautious about the overall challenges in the industry, the downward revenue trend, and the company's persistent net losses. Furthermore, the company's projected annual revenue growth rate of 2.9% falls below the expected 3.7% growth for the U.S. machinery industry, raising concerns about market share expansion and profitability improvement. The company's loan agreement modification (Amendment No. 6 to Term Loan Credit Agreement) announced in early April 2025 demonstrates efforts to restructure its financial framework while highlighting ongoing challenges in cash flow management. Finally, NN Inc's current price-to-sales (P/S) ratio of 0.24 is notably low, suggesting significant potential for valuation improvement if the company succeeds in enhancing profitability. Whether the executives' concentrated share purchases reflect confidence in this potential value or simply represent measures to defend the stock price will become clearer with upcoming quarterly results.

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