There are a lot of interesting stories in the market this week, and I figured I would highlight a few of them in case they weren't getting enough attention. Amazon's (NASDAQ: AMZN) stock split is naturally getting a lot of attention, but it's worth a longer look. I also think the blowout quarterly report by Dick's Sporting Goods (NYSE: DKS) and a special dividend declared by ZIM Integrated Shipping Services (NYSE: ZIM) are even more special than you think.
Let's take a closer look at these three stories. They're pretty crazy when you think about it.
Image source: Getty Images.
1. Amazon splits the difference
Shares of the leading online retailer opened higher on Thursday, bucking the market's sluggish start. Amazon announced that it would be executing a 20-for-1 stock split. The split isn't a surprise. I wasn't the only one expecting it to happen last month after Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) revealed plans for a 20-for-1 split.
The news that came after Wednesday's market close likely followed the same conversational trajectory within friendly circles. One person points out how a stock split is a zero-sum game, as 20 shares of Amazon at 5% of the price is the same thing. Someone will then counter that it's not a zero-sum game because it does make it easier for options traders to take positions with the stock at a lower price point.
The one thing I think was unbelievable here is that Amazon chose to copy Alphabet with the 20-for-1 split. Why not 30-to-1 or 10-to-1? There are so many numbers out there. Why not make things slightly different?
2. Dick's Sporting Goods earns its keep
The country's largest sporting goods retailer posted a great financial report. Net sales rose 7% to $3.35 billion for its fiscal fourth quarter that ended in January, up 29% from where they were two years ago before the pandemic. Top-line results exceeded expectations, and the bottom-line beat was even better. Net income for the holiday-backed quarter soared 50% on an adjusted basis to $3.64 a share. Wall Street pros were settling for an adjusted profit of just $3.43 a share.
Guidance is even better. It sees adjusted earnings per share clocking in between $11.70 and $13.10 for all of fiscal 2022. This is a small step back following a blowout 2021, but analysts were modeling $11.31 a share in adjusted net income.
Dick's Sporting Goods also boosted its quarterly dividend rate by 11%. The stock is now trading for a forward earnings multiple of 8.8 at the midpoint of its guidance with a decent yield of 1.8%.
Why is this so unbelievable? Despite coming through with a financial report that checked off all the boxes of a blowout performance -- and with the market rallying on Wednesday -- the stock is actually trading lower this week through the first three trading days.
3. ZIM's special dividend is really special
ZIM Integrated Shipping Services is an Israel-based provider of international container shipping services. It's had a pretty special run since going public in January of last year. With freight rates surging in the new normal, ZIM has been able to generate huge gains. Revenue and net income in the quarter it reported earlier this week catapulted 155% and 366%, respectively.
This growth isn't sustainable given the cyclical nature of transportation stocks, but that's not what is unbelievable here. ZIM has been ridiculously profitable in this climate, and it has a variable dividend rate where it pays 20% of its net income quarterly and 30% to 50% of its annual net income with a special distribution at the end of the year. ZIM's policy began in the second half of last year, and it has declared $2 and $2.50 in per-share quarterly dividends. This week, it announced a $17-a-share special annual dividend. In short, ZIM has declared a total of $21.50 in dividends since September.
Here's the mind-bending part of it all: ZIM went public 13 months ago at $15 a share. So if you got in on the IPO, you've already made all of your money back -- and then some!
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Rick Munarriz owns Alphabet (A shares), Alphabet (C shares), Amazon, Dicks Sporting Goods, and ZIM Integrated Shipping Services Ltd. The Motley Fool owns and recommends Alphabet (A shares) and Amazon. The Motley Fool recommends Alphabet (C shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
