Stock-Split Watch: Is ASML Next?
ASML has underperformed the broader semiconductor sector, and a stock split could be just what the company needs right now.
ASML Holding (ASML -6.93%), a significant player in the semiconductor industry, has experienced a 189% increase in stock value over the past three years, compared to the 247% growth of the PHLX Semiconductor Sector index. With shares trading above $1,600, the company might consider a forward stock split to make its shares more appealing to a broader range of investors.
A forward stock split, such as a 10-for-1 split, would reduce the share price while increasing the total number of shares outstanding. Although this move wouldn't alter ASML's fundamentals, it could potentially boost retail demand by lowering the price per share. Despite underperforming the semiconductor sector, ASML's recent performance has been impressive.
In its most recent quarter, the company reported revenue of 11.66 billion euros, a 55% increase from the previous year. This growth was driven by a substantial rise in the number of lithography systems sold, with 113 units sold last quarter compared to 66 in the same period last year. ASML expects to generate 14.7 billion euros in revenue for the current quarter, marking a 51% increase over the prior-year period.
Moreover, the company projects to expand its advanced chipmaking equipment capacity by 30% in 2027, with similar increases planned for 2028 and beyond. ASML's growth prospects are bolstered by strong demand for its equipment in AI data centers. The company's consensus earnings per share (EPS) estimates have risen, and analysts remain bullish on ASML's long-term EPS growth.
With ASML's current forward earnings multiple of 27, which is below its five-year average of 33, investors can consider adding this top semiconductor stock to their portfolios before it gains further momentum.
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