Costco Wholesale Corp (NASDAQ:COST) share price has been on a remarkable ascent, trading above $800. This puts the retail giant in prime stock-split territory.
Historically, stock splits occur after substantial price increases, and Costco's impressive growth makes it a noteworthy candidate for such a move.
Will Costco Follow Rival Walmart's Footsteps?
Walmart Inc's (NYSE:WMT) 3-for-1 stock split, initiated when its shares were trading below $200, sets a precedent. Costco's stock price has far surpassed this level, climbing nearly 30% year-to-date and almost tripling over the past five years. The company's consistent performance and its share price near record highs suggest it could follow Walmart's example.
Related: Walmart Announces 3-For-1 Stock Split: The Details
Financials Bolster Future Outlook
Costco's revenue growth remains robust. The company reported a 6.9% increase in net sales for the first 44 weeks of the year and a 5.3% rise in June's comparable sales. E-commerce continues to grow at a double-digit rate, bolstering the company's financial outlook.
Moreover, Costco's recent decision to raise its annual membership fee by $5 indicates confidence in continued growth without alienating its customer base.
Read Also: Here's How Much $100 Invested In Costco Wholesale 5 Years Ago Would Be Worth Today
Is A Costco Stock Split Eminent?
Despite these indicators, Costco has not split its stock since 2000, when shares were valued below $100. A stock split would make shares more accessible to a broader range of investors, potentially spurring further interest and investment. The question remains whether Costco will act soon or hold off until the stock price hits $1,000 or more.
A stock split could attract more attention and help Costco maintain its market leadership. However, some argue that a high share price alone isn't a strong enough reason for a split. Companies like NVR Inc (NYSE:NVR) have high stock prices but haven't split their shares.
Ultimately, whether Costco opts for a stock split or not, its impressive financial performance and strong market position make it a solid long-term investment.
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