KTCC

Key Tronic ($KTCC) Director Makes Bold $108K Stock Purchase Amid 57% Share Price Decline

05/16/2025 15:57

Key Tronic Corp ($KTCC) Director Craig Gates has made a substantial stock purchase on May 14, SEC filings reveal. According to Form 4 disclosures, Gates acquired 45,000 shares at $2.41 per share, investing approximately $108,450. This represents a significant commitment at current price levels and may signal insider confidence in the company's outlook. This purchase comes at a time when $KTCC shares have experienced considerable decline. The stock, which traded around $6 in late October 2024, has fallen approximately 57% to $2.60 as of May 15, 2025. Particularly since the beginning of 2025, the share price has remained below $4, mostly trading in the $2-$3 range. Such substantial insider buying amid this downtrend could suggest Gates believes the shares are currently undervalued relative to the company's intrinsic worth. Notably, Gates has also restructured his ownership. The filing indicates that 7,373 shares previously held through the company's 401(k) Retirement Savings Plan were rolled over into an IRA, transitioning to direct ownership. While this represents merely a change in ownership structure, it could indicate the insider's desire for more direct control over his equity stake. This isn't the first insider purchase at Key Tronic in recent months. In September 2024, Director Cheryl Beranek acquired 2,000 shares at $4.58 per share. Gates' significantly larger purchase at an even lower price point may indicate growing insider optimism about the company's long-term prospects despite the stock's continued decline. However, Key Tronic's financial performance remains challenging. Recent financial data shows the company reported an annual revenue of $483.94 million, yet posted a net loss of $6.38 million. Earnings per share stand at -$0.60, with a profit margin of -1.32%. For Q3 2025, revenue declined 21% year-over-year to $112 million. Despite these challenges, there are some positive indicators. The Q3 net loss of $0.6 million shows improvement from the $2.2 million loss in the same quarter last year. Operating cash flow for the first nine months increased to $10.1 million, up from $6.1 million in the prior-year period. This suggests the company is making progress in cost management, with gross margins improving from 5.7% to 7.7%. Key Tronic has also secured several new contracts, including a $12 million telecommunications program in Mexico and a $6 million pest control device project in Vietnam. These new business wins could contribute to improved revenue streams going forward. It's worth noting that in June 2024, the company experienced unauthorized access to its IT systems, resulting in a two-week production halt. Key Tronic disclosed that this incident had a material impact on its Q4 2024 results. While systems have since been restored, this operational disruption likely contributed to the company's financial difficulties in the short term. Currently, Key Tronic's market capitalization stands at approximately $25.3 million, which is remarkably low compared to its annual revenue of $483.94 million. The Price/Sales ratio of just 0.06 and Price/Book ratio of 0.23 reflect the market's deeply skeptical view of the company's profitability and growth prospects. In conclusion, Director Gates' substantial stock purchase may signal that insiders see long-term value at the current depressed share price. However, investors should carefully weigh this against Key Tronic's ongoing profitability challenges, revenue declines, and external factors such as changing tariff policies and dollar value fluctuations. The company's progress in cost management and the impact of new contracts on financial performance will be key indicators to watch in the coming months.

You can receive notifications when news is published.