United Technologies (UTX 0.59%) has an apt name, because you'll find a wide variety of different industrial technologies under its corporate umbrella. From its pioneering Pratt & Whitney aircraft propulsion business to its Otis elevator unit and its climate and security business, United Technologies serves a wide swath of the sector with an emphasis on defense, aerospace, and building infrastructure.
United Technologies is a cyclical company, and its stock has gone through cycles as well. The industrial conglomerate has a long history of doing stock splits at regular intervals, but it's been a while since United Technologies last pulled the trigger. Some look at its share price and say a move is overdue, while others believe that times have changed and that the company isn't likely to do a stock split in the near future. Let's look more closely at United Technologies' history to see what it can tell us about what could happen.
Image source: United Technologies.
United Technologies' history of stock splits
Here are the dates and split ratios for the stock splits that United Technologies has done in the past:
|
Date of Split |
Split Ratio |
100 Shares in 1950 Would Now Be... |
|---|---|---|
|
May 25, 1951 |
6 for 5 |
120 shares |
|
Sept. 26, 1955 |
3 for 2 |
180 shares |
|
Dec. 12, 1957 |
6 for 5 |
216 shares |
|
Oct. 30, 1965 |
3 for 2 |
324 shares |
|
May 18, 1976 |
2 for 1 |
648 shares |
|
June 10, 1984 |
2 for 1 |
1,296 shares |
|
Dec. 10, 1996 |
2 for 1 |
2,592 shares |
|
May 17, 1999 |
2 for 1 |
5,184 shares |
|
June 10, 2005 |
2 for 1 |
10,368 shares |
Data source: United Technologies investor relations.
United Technologies has produced relatively consistent growth over the years. From a stock split perspective, the company used stock dividends throughout much of its history, with smaller split ratios early on its existence. From the 1970s on, though, United Technologies has solely used 100% stock dividends to make its splits, which is equivalent to a two-for-one split ratio.
United Technologies has also been fairly predictable in terms of when it would do its stock splits. In the 1970s and 1980s, the company would wait until the stock had climbed into the $60 to $70 per share range before declaring a two-for-one split to bring the share price back down into the $30s. Later on, as higher share prices became more common, United Technologies would let its stock climb into the triple digits before pulling the trigger on a split, returning the price to a range of roughly $50 to $70 per share after the split took place.
Why hasn't United Technologies split recently?
Some investors expected United Technology to do another stock split as early as 2013, when the share price climbed back above the $100 mark. A booming aerospace industry seemed to support the idea that stock would remain strong. Yet as it turned out, United Technologies wasn't able to avoid seeing its share price drop back below $100, and it took until late 2016 for the industrial giant to get into triple digits for good.
Yet even now, United Technologies isn't so highly priced that a stock split seems inevitable. Hitting the $140-per-share level was momentous, but the business is subject to ups and downs. It appears that executives have adopted the increasingly popular idea that splitting shares is no longer necessary. Additionally, keeping a high share price gives United Technologies more weight in the Dow Jones Industrial Average.
A different kind of split?
The other reason why United Technologies might be hesitant to do a stock split is that it might go a different direction strategically. Some believe that the conglomerate might break up, splitting off its Otis elevator business, its Pratt & Whitney engine unit, and the climate and building controls division. Doing so might make investors appreciate the pieces more than they do the whole at this point, and the net impact would likely be to increase the share price of each separately traded company following the breakup.
For now, United Technologies doesn't look likely to do a standard stock split. Only once it figures out exactly what its future strategy will be will it make sense for United Technologies to consider whether a stock split is necessary or prudent.
