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Every investor in West Pharmaceutical Services, Inc. (

NYSE:WST

) should be aware of the most powerful shareholder groups. Institutions often own shares in more established companies, while it’s not unusual to see insiders own a fair bit of smaller companies. We also tend to see lower insider ownership in companies that were previously publicly owned.

West Pharmaceutical Services is a pretty big company. It has a market capitalization of US$8.0b. Normally institutions would own a significant portion of a company this size. Taking a look at the our data on the ownership groups (below), it’s seems that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about WST.

Check out our latest analysis for West Pharmaceutical Services

NYSE:WST Ownership Summary February 1st 19

What Does The Institutional Ownership Tell Us About West Pharmaceutical Services?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors own 89% of West Pharmaceutical Services. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It’s therefore worth looking at West Pharmaceutical Services’s earnings history, below. Of course, the future is what really matters.

NYSE:WST Income Statement Export February 1st 19

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don’t have a meaningful investment in West Pharmaceutical Services. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of West Pharmaceutical Services

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Story continues

Our data suggests that insiders own under 1% of West Pharmaceutical Services, Inc. in their own names. It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amount to less than 1%, we can see that board members collectively own US$72m worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking

if those insiders have been buying.

General Public Ownership

With a 10% ownership, the general public have some degree of sway over WST. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand West Pharmaceutical Services better, we need to consider many other factors.

I like to dive deeper

into how a company has performed in the past. You can find

historic revenue and earnings in this

detailed graph

.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check

this free report showing analyst forecasts for its future

.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at

[email protected]

.

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