IBM Stock: Do you think it will ever split?

[Night201]

I really want to get some IBM stock, but it's like $90+ share. I hope it splits sometime soon...Anyone know?

 

[PHiuR]

well if it splits soon...you better hop on the train now 🙂

 

[MaxDepth]

It split two years ago. It won't split for sometime. The P/E ration is still overvalued in this economy.

 

[Hector13]

Originally posted by: MaxDepth
It split two years ago. It won't split for sometime. The P/E ration is still overvalued in this economy.

huh? P/E ratio doesn't have anything to do with the stock splitting or not.

 

[Hector13]

Originally posted by: PHiuR
well if it splits soon...you better hop on the train now 🙂

why?

 

[arcas]

Don't look for IBM to split until the stock price reaches 160 or higher. And, since IBM tends to trade within a rather tight P/E ratio range (meaning you're not going to see IBM stock surge to 100 times earnings like you do some other companies), that would imply that IBM needs to essentially double the size of its business before you can start thinking about another split. Doubtful that's going to happen anytime soon given IBM's already a huge company. It's alot easier to boost your quarterly earnings from, say $1M to $2M than it is to boost them from $20B to $40B.

 

[T2T III]

Originally posted by: Hector13

Originally posted by: PHiuR
well if it splits soon...you better hop on the train now 🙂

why?

Because, stocks tend to rise after a split. Buying before the split happens ensures that you'll cash in on those extra gains in the event the stock rises following the split.

 

[Hector13]

Originally posted by: arcas
Don't look for IBM to split until the stock price reaches 160 or higher. And, since IBM tends to trade within a rather tight P/E ratio range (meaning you're not going to see IBM stock surge to 100 times earnings like you do some other companies), that would imply that IBM needs to essentially double the size of its business before you can start thinking about another split. Doubtful that's going to happen anytime soon given IBM's already a huge company. It's alot easier to boost your quarterly earnings from, say $1M to $2M than it is to boost them from $20B to $40B.

you guys realize that E/P is not going to change when there is a stock split, right? Both price and EPS are per share, so if there is a split, they will both drop by one half.

 

[Hector13]

Originally posted by: Tiles2Tech

Originally posted by: Hector13

Originally posted by: PHiuR
well if it splits soon...you better hop on the train now 🙂

why?

Because, stocks tend to rise after a split. Buying before the split happens ensures that you'll cash in on those extra gains in the event the stock rises following the split.

stock splits are a very ineffective signal for future stock returns. They may have worked at some point in the past (though even that is very debatable, espcially when you account for transaction costs), but there is very little evidence that they work now. And this is all univariate.. when accounting for risk and other characteristics of stocks, splits provide no useful information.