Stock prices for Costco pose a significant figure for some investors, sparking potential discussions about a seldom-occurring stock split.
Rebranding Costco's Costly Stock:
Costco's shares have shattered the $1,000 barrier, joining only a select group of S&P 500 companies sporting such lofty prices.
Investors have started asking: Could Costco Wholesale (COST) shrink its share prices like it does those warehouse aisles?
Picture this: your weekly run to Costco, where you nab toilet paper in bulk and snatch up rotisserie chickens at a steal. But what if those shares could be just as economical?
With Costco shares currently trading at around $1,040, it's part of a dozen S&P 500 companies sporting a four-digit share price. The crown for the priciest goes to NVR (NVR), whose shares ended the week above $7,000.
With Costco's shares surging by approximately 25% over the past 12 months, there's renewed discussion about whether the company might go the split route. Stock splits (10-for-1, for example, turns one $100 share into ten $10 shares) may not directly affect a company's value, but they can be interpreted as a bullish signal.
Oppenheimer analysts, who sport a bullish rating on COST shares and a $1,130 price target, hinted at the possibility in a recent report following Costco's quarterly financial results. According to the analysts, a potential stock split could drive further outperformance for the company.
But is a Costco stock split imminent? Not according to management, who say discussions about splits are frequent but there's no concrete plan at this moment. SERIOUSLY, COSTCO HAS BEEN THROUGH THIS BEFORE! It's been over 20 years since Costco conducted a split—that was a two-for-one split in early 2000[2]. Management was asked about splits at the company's January shareholder meeting, with CEO Ron Vachris simply saying there was "nothing to report."
CFO Gary Millerchip has said that stock splits are less essential nowadays due to the rise of fractional share trading[1]. "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 explained. The company continues to evaluate the idea and its implications, he added.
In simpler terms, Costco management sees fractional shares as enough to make their stock accessible to retail and employee investors. The main focus remains on operational growth, membership expansion, and margin improvement, with no need to split the stock just for the sake of affordability.
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[1] "Costco's management discusses potential stock split in analyst calls and earnings reports" - Seeking Alpha (via Google)[2] "Costco's return to the split circuit" - Fortune (via Google)[3] "Why Costco's stock keeps rising" - CNBC (via Google)[4] "Costco Wholesale's bullish outlook and lack of imminent stock split" - The Motley Fool (via Google)
Could investing in Costco's stock-market-traded shares ('ico') be a viable option for affordability, given the rise of fractional share trading?
With Costco continually evaluating the potential for a stock split, would it be a positive sign for investors if the company were to go the 'split route' as hinted by Oppenheimer analysts?
