Back to top

Image: Bigstock

Gap (GPS) Gains As Market Dips: What You Should Know

Read MoreHide Full Article

Gap (GPS - Free Report) closed the most recent trading day at $13.31, moving +0.83% from the previous trading session. The stock outpaced the S&P 500's daily loss of 0.27%. At the same time, the Dow added 0.4%, and the tech-heavy Nasdaq lost 0.18%.

Heading into today, shares of the clothing chain had lost 7.56% over the past month, lagging the Retail-Wholesale sector's gain of 8.25% and the S&P 500's gain of 7.36% in that time.

Investors will be hoping for strength from Gap as it approaches its next earnings release. In that report, analysts expect Gap to post earnings of $0.05 per share. This would mark a year-over-year decline of 89.58%. Meanwhile, our latest consensus estimate is calling for revenue of $3.71 billion, down 7.1% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.90 per share and revenue of $16.92 billion, which would represent changes of +31.94% and +1.48%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Gap. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.33% higher within the past month. Gap is currently a Zacks Rank #3 (Hold).

In terms of valuation, Gap is currently trading at a Forward P/E ratio of 6.94. This represents a discount compared to its industry's average Forward P/E of 9.13.

We can also see that GPS currently has a PEG ratio of 0.58. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Retail - Apparel and Shoes stocks are, on average, holding a PEG ratio of 0.72 based on yesterday's closing prices.

The Retail - Apparel and Shoes industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 96, putting it in the top 38% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

The Gap, Inc. (GPS) - free report >>

Published in