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Can Gap (GPS) Manage to Deliver a Surprise in Q1 Earnings?
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The Gap, Inc. (GPS - Free Report) is scheduled to release first-quarter fiscal 2017 results on May 18. The big question facing investors is whether this premier specialty apparel retailer will be able to deliver a positive earnings surprise in the quarter to be reported.
Last quarter, the company’s earnings came in line with the Zacks Consensus Estimate. In the trailing four quarters Gap has delivered three in-line earnings, while posting one beat. The company has an average trailing four-quarter surprise of 0.4%.
Gap remains on track with its transformation plan, focused on bringing meaningful changes to product portfolio and operating capabilities worldwide. Further, the company is keen on streamlining the operating model by creating a more proficient global brand structure and cutting costs. These growth drivers helped the company to deliver a decent fiscal fourth quarter that marked Gap’s third sales beat.
These catalysts have also helped Gap to outperform the Zacks categorized Retail – Apparel/Shoe industry. Evidently, the company’s shares jumped 19.1% year to date, against the industry’s decline of 7.8%.
However, the company’s results in the preceding quarter continued to be hurt by currency woes, costs associated with planned store closures, and persistent weakness across Banana Republic. Currency is also expected to linger and hurt fiscal 2017 results, as is evident from Gap’s soft view. Additionally, stiff competition remains a threat, thus making us slightly cautious of the upcoming results.
A look at Gap’s earnings estimates revisions shows that the Zacks Consensus Estimate for the fiscal first quarter has been stable in the last 30 days. However, the current Zacks Consensus Estimate of 29 cents per share for the fiscal first quarter reflects a year-over-year decline of 8.5%. Analysts polled by Zacks anticipate revenues of $3.4 billion, down 1.1% from the year-ago quarter.
Earnings Whispers
Our proven model does not conclusively show that Gap is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Gap is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 29 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Gap’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Home Depot Inc (HD - Free Report) , slated to release earnings on May 16, currently has an Earnings ESP of +1.24% and a Zacks Rank #2 (Buy).
Best Buy Co. Inc. (BBY - Free Report) , scheduled to release earnings on May 25, currently has an Earnings ESP of +12.50% and a Zacks Rank #2.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
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Can Gap (GPS) Manage to Deliver a Surprise in Q1 Earnings?
The Gap, Inc. (GPS - Free Report) is scheduled to release first-quarter fiscal 2017 results on May 18. The big question facing investors is whether this premier specialty apparel retailer will be able to deliver a positive earnings surprise in the quarter to be reported.
Last quarter, the company’s earnings came in line with the Zacks Consensus Estimate. In the trailing four quarters Gap has delivered three in-line earnings, while posting one beat. The company has an average trailing four-quarter surprise of 0.4%.
Gap, Inc. (The) Price and EPS Surprise
Gap, Inc. (The) Price and EPS Surprise | Gap, Inc. (The) Quote
Factors Influencing this Quarter
Gap remains on track with its transformation plan, focused on bringing meaningful changes to product portfolio and operating capabilities worldwide. Further, the company is keen on streamlining the operating model by creating a more proficient global brand structure and cutting costs. These growth drivers helped the company to deliver a decent fiscal fourth quarter that marked Gap’s third sales beat.
These catalysts have also helped Gap to outperform the Zacks categorized Retail – Apparel/Shoe industry. Evidently, the company’s shares jumped 19.1% year to date, against the industry’s decline of 7.8%.
However, the company’s results in the preceding quarter continued to be hurt by currency woes, costs associated with planned store closures, and persistent weakness across Banana Republic. Currency is also expected to linger and hurt fiscal 2017 results, as is evident from Gap’s soft view. Additionally, stiff competition remains a threat, thus making us slightly cautious of the upcoming results.
A look at Gap’s earnings estimates revisions shows that the Zacks Consensus Estimate for the fiscal first quarter has been stable in the last 30 days. However, the current Zacks Consensus Estimate of 29 cents per share for the fiscal first quarter reflects a year-over-year decline of 8.5%. Analysts polled by Zacks anticipate revenues of $3.4 billion, down 1.1% from the year-ago quarter.
Earnings Whispers
Our proven model does not conclusively show that Gap is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Gap is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 29 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Gap’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Home Depot Inc (HD - Free Report) , slated to release earnings on May 16, currently has an Earnings ESP of +1.24% and a Zacks Rank #2 (Buy).
Wal-Mart Stores Inc. (WMT - Free Report) , scheduled to release earnings on May 18, currently has an Earnings ESP of +1.04% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Best Buy Co. Inc. (BBY - Free Report) , scheduled to release earnings on May 25, currently has an Earnings ESP of +12.50% and a Zacks Rank #2.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>