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Neogen Corp. Message Board

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  • sdferrell sdferrell Dec 15, 2010 5:09 PM Flag

    Why would they split

    I guess I still don't understand your concern. Splitting will NOT dilute the earnings. To dilute means to make weaker. The earnings will be exactly what they were prior to the split. Yes, the math changes a bit when you look at earnings per share...if earnings were a $1 for X shares, they are now $0.50 for 2X shares, but that amounts to the same thing and everyone understands that. Nobody will find fault with NEOG because their EPS "dropped" in line with the split.

    Just like when you look at the price chart, everything gets "split adjusted". For example, the 52 week high gets adjusted to be 1/2 what it was before (all of this assuming a 2 for 1 split). As I said, it is a completely neutral event. Aside from the psychological factors, there is no real reason to root for or against a split.

    Similarly, the P/E is unaffected by a split. Yep, it is high. Although, if you look at the PEG, it is not outrageous. That said, I'm a little surprised at the recent, sustained price climb. It has always been a high flyer but right now it is on fire. I can only guess someone has good insight into even higher earnings ahead.


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