The French multinational tire manufacturer Michelin (OTCMKTS: MGDDF) announced on May 16, that its shareholders approved a 4-for-1 stock split. The actual stock split should effectively come into force on June 16, 2022.
Notably, the move comes against the backdrop of shares gaining 66% from December 2018 to December 2021.
Furthermore, the transaction will not impact the double voting rights attached to shares according to the company’s Bylaws, nor will it incur costs or formalities for shareholders.
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MGDDF chart and analysis
Meanwhile, year-to-date (YTD) shares of the company are down over 23%, with a slight recovery over the last month of 5.95%.
On the weekly chart, the shares have crossed over the 200-day Simple Moving Average on lowered trading volume. Current resistance lines seem to have formed around the $131 line; if the shares break above the mark, more upside could be had.
Also, analysts on Wall Street deem the shares a moderate buy, predicting that for the next 12 months, the average share price could reach $168.79, which is 31.10% higher than the current trading price of $128.75.
Earnings and price increases
As revealed by the company’s latest earnings, the tire manufacturer managed to have an operating income of €3 billion ($3.21 billion). Similarly, their sales are up by 16.3% year-on-year (YoY) to €24 billion; zooming out from this number, tire volumes increased 12%.
Meanwhile, the management of the company indicated that there would be price increases of 5-12% on most passenger and light truck replacement tires, a 9% increase on motorcycle tires, and a 12% increase for on-road and off-road goods and services.
At the beginning of 2022, Christopher Laskawi, a Deutsche Bank analyst, issued a catalyst call buy on the shares of Michelin. In general, the estimate was for Michelin and other premium tire manufacturers to have a positive 2022.
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