Costco Stock Has a Big Price Tag. Some Investors Are Eyeing a Rare Split

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3 days ago

Costco's shares finished the week with a price tag over $1,000 apiece, putting them in comparatively rarified company among those of S&P 500 companies.
The stock's rise has offered investors a fresh opportunity to wonder whether the company might split its stock—which hasn't happened since 2000.
CFO Gary Millerchip in December said that making the shares comparatively cheap is less useful to investors now than in years past because of the availability of fractional shares. Shoppers are fans of Costco's prices. Could the warehouse giant's stock get a smaller price tag, too?
That's on some investors' minds lately, with shares of Costco Wholesale (COST) among the most-expensive—on a straightforward price-per-share basis—in the S&P 500: The stock, which closed Friday at around $1,040, was one of a dozen with a four-digit share price. (Topping the list, for those who track such things, was NVR (NVR), shares of which ended the week above $7,000 apiece.)
Costco's shares have gotten there in part due to a rise of roughly 25% over the past 12 months, and now there's renewed chatter about whether the company might choose to split the stock. (Stock splits do nothing to the value of a company—broadly, a 10-for-1 split means that instead of one $100 share, you have 10 $10 shares—but they're sometimes taken as a bullish signal.)
'We remain upbeat on the company's ability to gain share going forward and believe shares are positioned for continued outperformance in the current backdrop. Catalysts from here, in our view, include a potential stock split,' Oppenheimer analysts—who have a bullish rating on the shares, along with a $1,130 price target that is above the Wall Street average as tracked by Visible Alpha—wrote late Thursday after Costco reported quarterly financial results.
Talk of a Costco split bubbles up from time to time partly because the company rarely does them; it hasn't happened since a two-for-one split in early 2000. Management was asked about splits at the company's January shareholder meeting, with CEO Ron Vachris saying there was 'nothing to report.' The company didn't respond to Investopedia's request for comment in time for publication.
CFO Gary Millerchip on a December conference call said that making the shares comparatively cheap is less useful to investors now than in years past because of the availability of fractional shares.
'But we do also recognize that there's a benefit of the stock feeling more affordable for our retail investors and employees who are very important constituents for us," he said. "So we'll continue to evaluate over time.'Read the original article on Investopedia