Regeneron: Prior Peak in 2015, but Up 100% in a Year
Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) was last seen trading at $613.21, and its 52-week range is $271.37 to $664.64. It has a $65.3 billion market cap. Regeneron is older than many of the large biotechs and came public back in 1991. This company has never paid a dividend, and we found no record of any stock splits. Regeneron has many things going for it, but COVID-19 offers serious hope as well.
Sherwin-Williams: Up 200% in Five Years, Up 900% Since 2010
Sherwin-Williams Co. (NYSE: SHW) was last seen trading at $671.69, and its 52-week range is $325.43 to $673.87. It has a $61.1 billion market cap. Sherwin-Williams sells paint all around the country and is a very well-known company. While it pays a 0.8% dividend yield, the last time it split its shares was back in the 1990s and 1980s.
Shopify: E-Commerce Gain of 3,000% Since IPO
Shopify Inc. (NYSE: SHOP) was last seen trading at $997.59, and its 52-week range is $282.08 to $1,107.92. It has a $119.7 billion market cap. Shopify has become “the next big thing” for businesses, and the company is actually a Canadian company rather than a U.S. one. It has sky-high valuations and pays no dividend, and we have seen no stock splits since its 2015 IPO.
Looking Backward and Forward
These calls for stock splits are not exactly new. We even made some of the same observations in 2015, including about AutoZone, Chipotle, Boston Beer and Sherwin-Williams.
Investors need to know that there are at least some dangers in splitting a stock too much or by too large of a ratio at any given time. General Electric Co. (NYSE: GE) comes to mind. GE is now trading with a rather embarrassing single-digit stock price, and it was even booted out of the Dow.
Berkshire Hathaway Inc. (NYSE: BRK-A) is one name that comes up over and over for a split due to a $300,000-plus share price, but it now has the Berkshire Hathaway Inc. (NYSE: BRK-B) shares that are closer to $212.00. Those were created back in 1996. Warren Buffett had noted back in the 1980s, even at much lower share prices, that he did not intend to split the stock, but those B-shares split 50-to-one in 2010, and now the stock is much more investable by the public.
One modern reverse split that changed how a stock traded was the case of Rite Aid Corp. (NYSE: RAD). The pharmacy chain operator still has only an $820 million market cap, but at $15 this would still be a sub-$1.00 stock had it not conducted a reverse-split of one-for-20 back in 2019. Rite Aid was very actively traded, with tens of millions of shares trading hands each day before that time. The prior history shows five splits that took place in the 1980s and 1990s, before the company ran into trouble in 1998 and suffered a low share price thereafter.
Announcing a stock split is not supposed to change a single fundamental of a company. Still, shareholders love traditional stock splits. To combat high stock prices, there have been recent efforts by Schwab, Fidelity and other services that went so far as to allow for fractional share purchases or slices. Even at $200 and $300, those slices are going to remain popular.
The chart from Ally below shows just how out of favor stock splits from S&P 500 companies had become over the past 15 years. Ally also pointed out that stocks splits were less effective as a stock price booster in recent years, but since 2010 the S&P 500 stocks announcing splits outperformed their benchmark by about 8% on average in the following 12 months.
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