Walmart is doing something it hasn’t done in more than two decades. When the market opens on Monday, the giant retailer will split its shares 3-for-1. It took this step to make its stock more affordable for its 21 million associates to purchase.
It’s possible that Walmart could start a trend. Here are three more stock splits that just might be on the way.
1. AutoZone
AutoZone‘s (NYSE: AZO) share price currently stands at nearly $2,700. That’s more than 15 times higher than Walmart’s share price last week. So could AutoZone opt to conduct its own split? It’s a definite maybe.
The auto parts retailer hasn’t discussed any plans to do so. However, AutoZone has split its stock twice in the past. On Feb. 3, 1992, the company conducted a 2-for-1 stock split. A little over two years later, it completed another 2-for-1 split.
However, both of those stock splits were a long time ago. Newly appointed CEO Phil Daniele was a relatively new store manager the last time AutoZone split its shares. The company has resisted a stock split over the last five years, though its share price topped $1,000 throughout most of the period. AutoZone could be content to keep its share price at an exceptionally high level.
2. Fair Isaac
Shares of Fair Isaac (NYSE: FICO) aren’t nearly as expensive as AutoZone’s, but they’re a lot more expensive than Walmart’s, recently trading at a little under $1,300. It’s fair to say (pun fully intended) that Fair Isaac is a great candidate for a stock split.
The data analytics company has conducted four splits in the past. It first split its shares 2-for-1 on June 27, 1995. It did a 3-for-2 stock split on June 5, 2001, followed almost exactly a year later with another 3-for-2 split. The company’s most recent stock split came on March 11, 2004 — again, a 3-for-2 split.
Like AutoZone, Fair Isaac hasn’t announced any plans for a stock split. But the company isn’t accustomed to having its stock trade at over $1,000. It only reached four digits this year after soaring by 84% over the last 12 months.
3. Broadcom
Broadcom‘s (NASDAQ: AVGO) share price of over $1,200 isn’t too much lower than Fair Isaac’s. It also only recently topped the $1,000 mark after more than doubling over the last year.
The semiconductor and infrastructure software company’s stock split history is a little convoluted. Avago acquired Broadcom in 2016, taking on the Broadcom name, but retaining its old stock ticker. Before that acquisition, Avago had never conducted a stock split. The “new” Broadcom hasn’t split its shares since the acquisition, either. However, the “old” Broadcom that was acquired split its stock three times: a 2-for-1 split on Feb. 18, 1999, another 2-for-1 split on Feb. 14, 2000, and a final 3-for-2 split on Feb. 22, 2006.
Broadcom hasn’t even hinted that it’s weighing a stock split. However, if the stock remains at its current high level, I wouldn’t be surprised if it decided that one was in order.
Split or no split, are these stocks good picks?
Whether or not AutoZone, Fair Isaac, and Broadcom conduct stock splits soon, they all have strong underlying businesses. The main concern with two of these stocks, though, is that their valuations are as nearly as sky-high as their share prices.
Fair Isaac trades at a nose-bleed forward price-to-earnings ratio of 49.5. Broadcom’s shares trade at 26.8 times expected earnings. Only AutoZone has a reasonably attractive valuation, with a forward earnings multiple of 18.3. As such, I think that the auto parts retailer’s stock makes a good pick for investors, split or no split.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool recommends Broadcom and Fair Isaac. The Motley Fool has a disclosure policy.
3 Stock Splits That Could Be on the Way After Walmart’s was originally published by The Motley Fool
Source: finance.yahoo.com