Starbucks share price up, announces a two-for-one stock split

Starbucks Corp. plans to initiate its first stock split in nearly a decade on Wednesday after shares of the worlds largest coffee-house chain hit a record high last month.

Over the past three years the value of the companys shares has increased more than 80% and the board decided its time for the sixth stock split since Starbucks initial public offering in 1992. The announcement was made during the annual shareholder meeting.

The Seattle-based company said that shareholders of record as of March 30 will be given an extra share for each one they own on April 8. Once split, Starbucks shares will resume trading on April 9.

Usually, companies split their stock to make the price attractive to individual investors and although the split doesnt actually affect the market capitalization of a company it increases the number of outstanding shares. More shares and lower price often result in higher trading activity.

The move marks a healthy growth since the companys last stock split was in 2005, which was again a two-for-one. Currently Starbucks has nearly 750 million shares outstanding.

Additionally, the company said that the split has “modestly” increased its earning guidance for the second quarter and for financial 2015. Previously, the company had projected to deliver second-quarter per-share earnings of between $0.64 and $0.65 and full-year profit of $3.09 to $3.13 a share. On a split adjusted basis, the company estimated second-quarter earnings of $0.32 to $0.33 a share and $1.55 to $1.57 a share for the full-year.

“This split is a direct reflection of the past seven years of increasing shareholder value, enhancing the liquidity of our shares, and building an attractive share price,” said Chief Executive Howard Schultz.

Additionally, the company announced it had teamed up with Chinese food and beverage producer Tingyi to expand its reach in the country. Under the partnership, Starbucks would be responsible for brand development and innovation while Tingyi would be in charge of manufacturing and selling ready-to-drink Starbucks products.

China is the companys fastest growing market outside the U.S. and Starbucks has 1 500 store in nearly 90 cities. The company said that the RTD coffee and energy business in China was worth $6 billion and projected the market to grow 20% over the next three years.

Starbucks gained 1.54% on Wednesday and closed at $95.84 on the NASDAQ, marking a one-year increase of 28.47%. The company is valued at $71.86 billion. On Thursday the stock edged up 0.85% to $96.65 during pre-market trading.

According to the Financial Times, the 20 analysts offering 12-month price targets for Starbucks have a median target of $98.00, with a high estimate of $108.00 and a low estimate of $83.00. The median estimate represents a 2.25% increase from the last closing price.