Will Lowes Stock Split?

A Lowes stock split would indicate that this company is doing well in terms of share value. That’s certainly a possibility in today’s market. Here we examine some of the factors behind stock splits and a Lowes stock split in particular, to know more about what’s likely to happen with this equity in upcoming quarters.

When Was The Last Lowe’s Stock Split?

Lowe’s stock (ticker: LOW) has split several times over its 36-year chart.

The last split on record was in July 2006, when the company instituted a 2-for-1 stock split when the share price hit $63.

How Do You Know If A Stock Will Split?

Many times, investors will learn of an impending stock split from industry news or internal communications. However, another way to predict the stock split is to look at the company’s share price and history of stock splits.

Companies tend to institute stock splits when individual share prices rise, a lot, and become more expensive than what a small trader can easily afford.

Stock splits are essentially an administrative way to make an individual stock look cheaper – they don’t change the value of what stockholders have obtained, because the result is (for a 2:1 split) twice the shares, each of which is worth half the value. It’s a wash!

Will Lowe’s Stock Split?

In this instance, we can actually see that there’s evidence that Lowe’s could be nearing the kinds of levels where board members might make the decision to institute a two-for-one or even a three-for-one stock split.

Remember that in July 2006 when the last split happened, the share price was just above $60. Lowe’s share price is now around $190 as of press time. That means it towers above that original price where the stock had split before.

When you look at this, you can think about it intuitively – if Lowe’s board members don’t like LOW share price to be north of say $60 per share, they will want to knock down this impending $200 stock price with a split, even though the rising activity on the chart is definitely good news for everybody.

Along with the current LOW stock price, which is incredibly high relative to its past history, a lot of that growth happened recently – the share price was down at $158 per share at the beginning of March, and down to near $150 last November.

Also, looking back to March of 2020 when the pandemic closures hit, Lowe’s stock declined as far south as $60-$70 per share, so that was definitely not a time for a stock split.

Lowe’s Stock Split: Good Or Bad?

In many key ways, a stock split is neither good or bad. It’s simply an administrative move, a sort of housecleaning for a company that wants to make its share prices more attractive to small investors. With the rise of fractional stock trading, splits are even less useful or necessary than they were before.

However, as we always mention with stock splits, one of the downsides is that they can be confusing for newcomers who are trying to do due diligence on a stock.

Imagine you’re looking at a history like Lowe’s 36-year stock chart, and you notice that values changed drastically over time. Was that all organic growth, or were some stock splits in play?

If you factor in all the stock splits over that enormous span of time, you see that you get extremely higher per-share prices.

Aside from that though, there is a bright side to stock splits, because as we said, the smaller investors can buy more shares. It’s not as intimidating if you’re someone who wants to dabble in the stock market to buy a few $10 shares, but you’re likely to balk at buying a single $800 share, because it’s just too expensive.

New options like exchange traded funds have come on the market to help deal with these realities, but companies will also enact a stock split in order to entice the rank-and-file of shareholders.

What does a 2 to 1 stock split mean?

There are some important semantic issues here in the market. It’s extremely important to know that the terminology is not a 2 to 1 stock split – it’s a 2 for 1 stock split.

So regardless of what you call it, the ultimate result is that a person who had one share now has two shares. A person who had two shares now has four shares; etc. Looking at the market shorthand for a stock split, it seems that it would be the other way around. But it’s not.

After you get your head around the idea that regular stock splits issue more shares and not fewer, you can look at a history of reverse stock splits, where companies actually do go the other direction and decrease the amount of outstanding shares. What you see is that this is an unusual action that usually has to do with negative factors in company operations.

Will Lowe’s Stock Fall After It Splits?

It’s important not to confuse negative share price activity with what happens after a stock split. After the split, the share will be worth half of what it was, but that’s not because the underlying holdings lost value. Again, it’s a clerical change.

As for whether Lowe’s stock will fall long-term, the odds are against based on current revenues and earnings projections. That indicates that LOW could very well go either a bit or a lot higher, and if it goes even somewhat higher, that might trigger a split.

Is Lowe’s Stock Split Good Long-term?

In a way, a LOW stock split would be good for the company over the long term.

The stock split means that the company had a high enough share price that it was worth splitting up the equity into smaller shares. So that’s a good sign that the company is on the right track, and that they have weathered business challenges well.

Then when people look back at the history of the company, they will see a steady record of gains and ensuing stock splits. In other words, when you look at the big giants, the blue-chip companies that have become established and been around for a while, many of the kinds of companies that Warren Buffett really loves, for example, you see that they have a history of doing stock splits once in a while. So in that way, the stock split is good for the firm.

Take a look at all of the great resources we offer at Financhill to help you to plan your ideal portfolio!

---

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.