The possibility of stock splits is drawing investor attention as several high-performing companies, similar to Nvidia (NASDAQ:NVDA)’s 2024 split, are seeing their share prices reach significant heights. Companies often pursue stock splits to make their shares more accessible to retail investors, even though the move doesn’t change the fundamental valuation of a business. Stocks in the four-digit price range, or approaching it, are likely to be under scrutiny for potential splits, which could result in higher trading volumes and temporary price gains. This trend underscores the broader interest in capitalizing on strong-performing stocks in the market.
Why might Mettler-Toledo consider a split?
Mettler-Toledo International (NYSE: MTD), a leading provider of laboratory instruments, is currently valued at approximately $1,253.85 per share. The company has experienced steady growth, fueled by demand for its products post-pandemic. Over the past five years, the stock has delivered an aggregate capital appreciation of roughly 60%. With a gross margin of 59.48% and an adjusted 2024 earnings per share (EPS) guidance of $40.35 to $40.50, Mettler-Toledo demonstrates robust financial health. However, the company has not performed a stock split since 1996. If the share price continues to trend toward $1,500, discussions around a potential split may arise, although this is far from guaranteed.
Could Broadcom repeat its recent split success?
Broadcom (NASDAQ: AVGO) has already implemented a 10-for-1 stock split in 2024, reducing its per-share price to around $150 at the time. Currently, its stock price has rebounded to approximately $250, indicating strong market interest. The recent acquisition of VMware and the ongoing enthusiasm surrounding AI-related technologies have bolstered Broadcom’s valuation. While another split might not occur in the immediate term, continued price growth could make it a consideration within the next few years, especially as the semiconductor industry remains a focal point for investors.
Fair Isaac Corporation (NYSE: FICO), widely recognized for its credit scoring services, has seen its stock price surge over $2,000 per share, driven by strong financial performance. The company’s most recent quarter showed a 12.3% revenue increase, with its core “Scores” segment growing by 20%. Despite its history of four stock splits between 1995 and 2004, FICO has not executed a split in 20 years. Its recently authorized $1 billion share repurchase program reflects confidence in its valuation, which could reignite conversations about a split.
In previous years, stock splits were more common as a way to boost accessibility for smaller investors. Companies like Apple (NASDAQ:AAPL) and Tesla have used this strategy to attract broader market participation. Nvidia’s 2024 split reignited interest in the practice, particularly for high-growth, high-price stocks. However, many companies now prioritize share repurchase programs over splits, as buybacks often deliver stronger long-term shareholder value. This shift indicates that while splits remain possible, they are no longer a default strategy.
Stock splits can be a signal of strong company performance but should not be viewed as an indicator of long-term returns. For investors, focusing on fundamentals such as revenue growth, profitability, and market leadership is crucial. Companies like Nvidia, Broadcom, and others show the importance of balancing valuation metrics with market trends. While stock splits may attract short-term attention, understanding the underlying business dynamics remains key for sustained investment success.
