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Stock splits are usually a positive sign that a company (and its stock) is doing well. A split does not change the actual value of an investor’s stock holdings, it merely divides the holding into smaller parts. However, at a lower price point, stocks can become more accessible and attractive to more investors. This also indicates the success of the stock. Stocks are usually split because of their high price.
However, not having a stock split does not necessarily mean that the stock price is low. costco wholesale (NASDAQ:Cost) The stock is currently trading around $700. Even if the company briefly splits its stock, the stock price could still be quite high.
Could Costco do a stock split in 2024?
Costco’s last stock split was in 2000.
The last time Costco management conducted a stock split was in early 2000, when the warehouse club retailer split its stock on a 2-for-1 basis. There were several other splits in the 1990s, but there have been no splits for over 20 years.
If the company were to split its stock this year, it would likely be more than a 2-for-1 split, as the stock price would still be relatively high at $350. For example, a 1:7 split would result in a level of approximately $100. There are no hard and fast rules as to what the stock price will be after a split, but looking at splits by other companies over the past few years shows that aiming for $100 per share is popular.
Just because stock prices are high doesn’t mean a split is inevitable.
Costco is one of the most expensive stocks in the world. S&P500, There are also stocks with even higher stock prices that have not undergone stock splits.shares of Chipotle Mexican Grill Home builders are trading above $2,300 NVR The stock price is above $7,400. High prices alone are not sufficient reason to suggest that a stock split is inevitable. Neither Chipotle Mexican Grill nor NVR have ever completed a stock split in their history.
Ultimately it comes down to management and their preferences.Warren Buffett’s berkshire hathaway The company has two classes of stock. The original Class A has never been split with a current price of over $550,000. The other is class B. Class B trades at a more modest price point of around $370 and has been split several times since its release. But other than price, there is little real difference in owning the stock.
Why Costco probably won’t do a split this year
If Costco were to split its stock, it would likely be in 2022, along with many other big-name stocks that have started doing so. Amazon, alphabetand tesla.
That same year, Costco’s stock price also reached a high of about $600, but there was probably more reason to do so at a time when stock splits were getting a lot of attention from investors. Costco’s reluctance to split its stock at the time suggests it has no intention of doing so anytime soon.
Costco is doing well where it matters most – the bottom line
In an era when fractional shares are more readily available, stock splits should be less important to investors. What matters is business performance, and in Costco’s case, the company’s financial position remains strong. In its most recent quarter (ending November 26, 2023), Costco reported revenue of $57.8 billion, representing a 6% year-over-year growth rate. Profits increased 16% to approximately $1.6 billion.
Costco’s strong customer loyalty and brand make it one of the best growth stocks to buy and hold for the long term. The company has performed well under various economic conditions over the past few years, demonstrating its overall strength and versatility.
Costco’s stock trades at nearly 50x price-to-earnings, so it’s not a cheap buy, but with plenty of opportunities for continued growth and international expansion, it’s a good bet regardless of whether the stock price is higher. , this could be a solid investment for years to come. Average stock price.
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. David Jagielski has no position in any stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Berkshire Hathaway, Chipotle Mexican Grill, Costco Wholesale, NVR, and Tesla. The Motley Fool has a disclosure policy.
Is Costco planning a stock split in 2024? Originally published by The Motley Fool
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