Investors looking for positive indicators of a stock’s future performance often consider a stock split a good sign. As a technical matter, a stock split changes nothing about a company’s performance or value. True, per share numbers must be adjusted, but the underlying revenues and profits aren’t altered—just the per share statistics. Still, companies often split their shares when their stocks have appreciated to the point where investors may question an investment because of limited capital. So, by splitting the shares, the stock becomes more appealing to a broader group of investors and, it is believed, that pent up demand for what is already a dear stock, based on a relatively high price, will help spur the price higher after the split.

Of course, stock prices don’t always continue to ascend after a stock split. And, there are times when companies with low share prices use reverse stock splits to boost share prices above exchange minimums so that they may remain listed. So, a stock split is not the sole criteria by which a company should be judged. That said, it is an interesting indicator that more research about a company could be worthwhile.

Every week on the back page of the Ratings & Reports section of The Value Line Investment Survey is a list of upcoming stock splits. Two stock with and upcoming splits are V.F. Corporation (VFC) and Canadian National Railway Co. (CNI).

V.F. Corporation 

V.F. Corp. is the world’s largest publicly held apparel supplier and is a leader in the jeanswear, outdoor, sportswear, imagewear, and apparel categories, and has a relatively-small presence in footwear. Specifically, VFC has the largest unit share of the jeans market in the United States. The company’s brands include Lee, Wrangler, Nautica, Jansport, The North Face, VansTimberland, 7 For All Mankind, and Reef, among others.

Although consumers have been less focused on small ticket items of late, instead choosing to make larger, more substantial purchases, we still have confidence that the company will end the year on a high note. It has been rapidly building out its own retail operation, with The North Face, Timberland, Vans, and Kipling leading taking priority. The goal is to raise direct-to-consumer sales to 25% of the total from 21% in 2012. This will rely largely on the success of its cold weather product lines. However, as always, there is risk that warm- and dry-weather conditions will extend late into the year. This appears to be more common in recent decades. 

Elsewhere, V.F. is planning to increase marketing expenditures from 5.5% of sales to 7.0%. The company is also establishing three Global Innovation Centers, with the intent to lead the apparel and footwear industry in technical advances. These centers are expected to be operational in the first half of 2014. 

On October 16, 2013, V.F.’s Board of Directors approved a four-for-one split of the company's shares of common stock, which will be payable in the form of a stock dividend. Shareholders of record as of the close of business on December 10, 2013 will receive three additional shares of common stock for each share of common stock they own, payable on December 20, 2013. The company’s VF Chairman and Chief Executive Officer Eric Wiseman added some additional color saying, "Today's announcement is the result of VF's strong financial and stock price performance, and the confidence we have in our ability to create long-term profitable growth and returns for our shareholders."

Canadian National Railway Company

Canadian National Railway operates Canada’s largest railroad system with 20,100 route miles spanning from East to West across Canada and from North-South to the Gulf of Mexico through the United States Midwest. CN’s freight revenues are derived from seven commodity groups, Petroleum & Chemicals, 17% of ’12 revenues; Metals & Minerals, 11%; Forest Products, 15%; Intermodal, 20%; Coal, 7%; Grain & Fertilizer, 17%; Automotive, 5%; Other, 8%.  From a geographical standpoint, 17% of revenues relate to U.S. traffic, 29% from transborder, 22% from Canada, and 32% from overseas. Due to its product and geographic diversity, the company is well positioned to face economic fluctuations. 

Canadian National continues to set the standard for efficiency in North American railroading. The company’s operating ratio (defined as rail expenses divided by revenues, so lower is better) for the second quarter declined by 40 basis points, to 60.9%. CN’s profitability is easily the best among Class 1 railroads in North America. We attribute much of this success to a efficient operating schedule. Scheduled railroading is easier in containerized intermodal markets, and CN has mastered that, but it is now bringing service excellence to bulk commodities, leading to expanded margins.

Still, the near-term traffic outlook is uninspiring. Indeed, CN expects negative volume comparisons in bulk markets in the second half of 2013. Nonetheless, there are good longer-term growth opportunities. The company is accelerating work to upgrade car loading capacity and track for lines serving frac sand markets in Wisconsin and Alberta, Canada, which supply oil and gas drilling customers. And once the oil is surfaced, crude-by-rail demand should continue its explosive growth.

Recently, its Board of Directors has approved a two-for-one stock split of the Company’s common shares outstanding. The two-for-one stock split will take the form of a stock dividend. Shareholders will receive one additional common share of CN for each common share held. The stock dividend will be payable on Nov. 29, 2013, to shareholders of record at the close of business on Nov. 15, 2013.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.