Company directors are buying the dip on AGL shares. Should you?

The AGL Energy Limited (ASX: AGL) share price has plummeted 13% over the last seven days, with most of that tumble attributed to the company’s $1.1 billion first half loss.  

But there might be a silver lining to the downturn. AGL directors appear to have taken advantage of the dip, bolstering their stakes in the stock. Are they onto something?

Shares in the S&P/ASX 200 Index (ASX: XJO) energy retailer last traded for $6.89.

Let’s take a closer look at the recent insider buying at AGL and what brokers are tipping for the future.

AGL insiders on a share buying spree

AGL insiders went on a buying spree yesterday, snapping up a combined 61,900 securities for a total of around $433,300.

The largest parcel was acquired by CEO and managing director Damien Nicks, who bought 27,000 shares in AGL for $189,000.

Non-executive director Christine Holman also snapped up a sizeable handful of shares, buying 13,000 shares for $91,000.

Chair Patricia McKenzie was in on the action too, forking out $49,000 for 7,000 shares in the company.

Finally, non-executive directors Vanessa Sullivan and Miles George bought 5,000 and 9,900 AGL shares respectively, paying $35,000 and around $69,370 for their individual parcels.

The approximate $7 price tag on each stock purchased by the insiders was notably higher than the $6.83 low inked by the AGL share price in recent sessions.

Though, it’s 17% lower than the stock’s January high of $8.215.

Are the directors onto something? Morgans thinks not

Broker Morgans is sceptical of AGL shares. It reiterated its hold rating and slashed its price target to $6.89 following the release of the company’s earnings, my Fool colleague James reports.

The broker noted the results represented a significant disappointment, and while it expects the future to be brighter, it warns the path ahead could be fraught, saying:

We anticipate increasing dividends as earnings begin to recover in the next 12 months however we think the market will want to see clear evidence of this before it regains confidence in the company and the sector.

The post Company directors are buying the dip on AGL shares. Should you? appeared first on The Motley Fool Australia.

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• Why AGL, Dicker Data, Megaport, and Suncorp shares are dropping

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