Why Costco Stays the Course on Stock Split Decisions

Stock splits represent a milestone for thriving companies—they signal that a business and its equity have reached impressive valuations. While a split doesn’t alter the actual value of an investor’s stake, it reshapes that holding into smaller, more digestible units. This accessibility typically attracts a broader investor base, and the very act of splitting usually reflects a stock’s triumph; companies that divide shares do so precisely because their prices have climbed substantially. Yet the absence of a stock split doesn’t necessarily indicate weakness. Costco Wholesale (NASDAQ: COST) trades near the $700 range and could comfortably execute a split without sacrificing valuation. The question isn’t whether Costco could pursue a split—it’s why the company has chosen not to.

Two Decades Without a Share Restructuring

Costco’s last share division occurred in early 2000, when the warehouse retailer executed a 2-for-1 split. Before that, several splits punctuated the 1990s, but since the new millennium arrived, nothing. If leadership were to authorize a division today, a 2-for-1 split would merely push the price to around $350—still commanding a premium. A more aggressive 7-for-1 arrangement would land shares near the $100 benchmark, a sweet spot many corporations target post-split. The mathematics are straightforward; the decision, apparently, is not.

High Valuations Don’t Dictate Split Strategy

Among S&P 500 constituents, Costco ranks among the priciest. Yet the market hosts even more expensive equities that have never undergone division. Chipotle Mexican Grill’s shares exceed $2,300, while NVR, the homebuilder, sits above $7,400—neither has ever completed a split. Price alone proves insufficient justification. Warren Buffett’s Berkshire Hathaway illustrates this perfectly: its Class A shares, valued above $550,000, have never split, while the Class B variant, priced around $370, has split sparingly since 1996. The divergence reveals a fundamental truth: valuation structure is ultimately a management prerogative. Leadership defines policy; share price merely provides context.

Why Recent Years Haven’t Triggered Action

Had Costco been inclined toward a split, 2022 represented the opportune moment. That year, the stock approached $600, and corporate America experienced a stock split renaissance—Amazon, Alphabet, and Tesla all authorized divisions. The market buzzed with enthusiasm for restructured shares. Costco’s decision to abstain then suggests deep institutional conviction against the practice. The company’s silence since only reinforces this position. Declining to act when the environment invited it points toward a deliberate, sustained philosophy.

Financial Strength Overshadows Share Structure Concerns

In an age where fractional share ownership is commonplace, splits have become largely ceremonial. What matters is operational excellence, and Costco excels here. During the November 2023 quarter, the retailer generated $57.8 billion in revenue, representing 6% year-over-year growth, while earnings surged 16% to approximately $1.6 billion. That momentum persists. Costco’s brand loyalty and operational resilience have established it as a premier holding for long-term investors. The company has demonstrated adaptability across diverse economic climates, validating its fundamental durability. Trading at nearly 50 times trailing earnings, the valuation isn’t bargain-basement, yet the combination of consistent growth, robust international expansion opportunities, and operational prowess positions this equity as a credible long-term investment—regardless of its elevated share price.

The Costco story underscores a broader investment reality: technical adjustments like stock splits matter far less than the underlying business quality. As long as Costco continues executing its core mission—delivering value to members, driving comparable sales growth, and maintaining operational efficiency—the question of whether shares divide becomes almost irrelevant.