Shares of the defense contracting giant Lockheed Martin (LMT -2.97%) are trading just under $600 as of this writing, but shares have hit several all-time highs this year.
If the stock sets more all-time highs, some investors may wonder whether that could be the right time for a stock split. Here's what history suggests about the likelihood of that happening.
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What history tells us
Based on Lockheed Martin's history, it's unlikely it will act quickly to conduct a stock split. The last time it split its stock was in 1999, when it conducted a 2-for-1 split.
Also, companies with share prices that are $1,000, like Micron Technology, aren't splitting their stock, so the Lockheed Martin stock price still may have a bit to go before a split happens. It's up to the management team to decide if it wants to conduct a stock split, so there is never a guarantee that one will take place.
NYSE: LMT
Key Data Points
Keeping speculators at bay
Stock splits tend to increase the attention a company receives, which can attract short-term investors who try to capitalize on that attention, potentially giving a stock a short-term boost. According to 40 years' worth of data from Bank of America, shared by Statista, companies that split their stock see an average total return of 25.4% in the 12 months following the announcement of a split, which is more than twice the average return of the S&P 500. Once the stock price climbs, however, those short-term buyers may look to sell, injecting volatility into the stock price.
In addition, as long as there is a healthy demand for the stock, the management team isn't incentivized to split it. Looking at Lockheed's prospects as a potential long-term investment will serve an investor better than hoping for a stock split and trying to play a timing game.
