Yet another company announced a big stock split, giving more credence to six-year bull market. During Wednesday’s afternoon trading session, Starbucks Corp. (NASDAQ: SBUX) announced that its board of directors has declared a two-for-one stock split. Most companies engage in a stock split to keep the price more attractive to investors.
The shareholders as of March 30 will each receive one additional share for each share of Starbucks held by that date. The shares will begin trading on a split-adjusted basis on April 9.
On a split-adjusted basis, the company’s previously communicated earnings guidance equates to a range of $0.32 to $0.33 per share for the second fiscal quarter, and a range of $1.55 to $1.57 per share for the full 2015 fiscal year. Due to this adjustment, the company is updating earnings targets.
This marks the sixth stock split that Starbucks has had. The other five are listed below:
- 2005 in a 2-for-1 split
- 2001 in a 2-for-1 split
- 1999 in a 2-for-1 split
- 1995 in a 2-for-1 split
- 1993 in a 2-for-1 split
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Howard Schultz, chairman and CEO of Starbucks, commented on the latest split:
On behalf of our board of directors, the Starbucks leadership team and the 300,000 partners who wear the Green Apron globally, I am proud to announce this two-for-one stock split, the sixth in our 23-year history as a public company. This split is a direct reflection of the past seven years of increasing shareholder value, enhancing the liquidity of our shares, and building an attractive share price. It also takes place at a time when Starbucks shareholders are experiencing an all-time high in value as we continue to deliver world-class customer service and, in turn, record profits and revenue.
Stock splits are often called a gimmick, but think about this for an example. If you bought 100 shares at the Starbucks IPO and forgot that you owned them, after six splits that 100 shares would have turned out to be 6,400 shares. Not bad, even for half of the current $96 stock handle.
Shares of Starbucks shot up after the announcement of a stock split by almost 1.7% to $95.97. The stock has a consensus analyst price target of $97.10 and a 52-week trading range of $67.93 to $96.24.
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