Micron reports fiscal fourth-quarter earnings after the close on Wednesday with its shares trading above $1,000, a level that makes a first stock split since 2000 look increasingly likely. Analysts expect another jump in revenue and profit tied to the ongoing memory-chip shortage, and management is also nearing the end of buyback restrictions under the CHIPS Act.
Micron heads into Wednesday's report trading at $1,067 per share, one of the highest share prices in the S&P 500. The stock is up more than 1,000% over the past year and a half, fueled by a memory shortage that has pushed chip prices sharply higher.
Nvidia's split sets a precedent
Nvidia did a 10-for-1 stock split in 2024 when its share price was around $1,200, and Micron now trades in similar territory without having split its stock since 2000. A split would not change the company's fundamentals, but it would make individual shares easier for retail investors and employees to buy, and it would make options on the stock more liquid since contracts are based on 100 shares. There's also evidence that stocks tend to outperform in the 12 months after a split, according to research from Bank of America.
Earnings could add to the case
Analysts expect Wednesday's report to show revenue jumping 354% to $51.4 billion. They also expect adjusted earnings per share to rise from $3.03 to $31.71. That follows a June quarter in which revenue jumped 346% to $41.5 billion and net income climbed from $1.89 billion to $28.2 billion. Based on the forecast, Micron trades at less than 9 times run-rate earnings and less than 7 times expected fiscal 2027 earnings.
Buybacks and a dividend hike are also on the table
The CHIPS Act restricts Micron's buybacks until Dec. 9, after which management is likely to accelerate share repurchases. A dividend increase could also make sense, since Micron's yield has fallen to 0.05% as the stock has climbed. Nvidia, facing a similar situation, raised its dividend by 25x and announced a $150 billion share buyback program.
There's a good chance Micron splits its stock before the end of the year, and the shares could climb further if it does.
Source: Fool
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