Is Coca-Cola Getting Too High?
Coca-Cola (NYSE:KO) on Wednesday proposed its first stock split in 16 years. The company announced that the 2-for-1 split is in accordance with its plan to double revenue over the next decade.
The proposal is subject to approval by shareholders July 10. If approved, Coke’s split would increase the number of its shares to 11.2 billion from 5.6 billion, with shareholders receiving an additional share of stock for reach share held in early August.
The world’s biggest beverage maker’s stock has been split only 10 times since it began trading in 1919. Companies split stocks when they think their share price has gotten too expensive, or if the stock is trading above similar companies’ stock.
Coca-Cola reported first-quarter profit that beat Wall Street’s expectations last week. The impressive performance was due to the company selling more drinks internationally, particularly in emerging markets like China and India.
Coca-Cola’s success has been in its ability to manage rising commodity costs by offering smaller drink sizes that have higher profit margins. In turn, the company has not scared off budget-conscious consumers, while simultaneously attracting health-conscious consumers with smaller drink sizes.
Shares of Coke, up 7 percent this year, rose 47 cents to $74.59 in morning trading.