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The Zacks Consensus Estimate for the fiscal first-quarter bottom line is pegged at 14 cents per share, suggesting significant growth from earnings of 1 cent reported in the year-ago quarter. The consensus estimate for the fiscal first-quarter earnings has moved up 16.7% in the past 30 days. For revenues, the consensus mark is pegged at $3.3 billion, indicating a 0.1% rise from the year-ago quarter’s reported figure.
In the last reported quarter, Gap’s earnings beat the Zacks Consensus Estimate by 145%. The company delivered an earnings surprise of 180.9%, on average, in the trailing four quarters.
Gap’s first-quarter fiscal 2024 performance is expected to have gained from improved margins, driven by lower airfreight and improved promotional activity. Lower advertising expenses and technology investments from cost-saving actions also bode well. The company has been aggressively undertaking cost-management actions, which are expected to have improved its performance in the to-be-reported quarter.
On the last reported quarter’s earnings call, management expected the gross margin to expand in the first quarter of fiscal 2024. This is likely to have been backed by merchandise margin expansion and commodity cost tailwinds. It expected to take a prudent approach with respect to the promotional environment in the first quarter.
We expect an adjusted gross margin expansion of 100 basis points for the fiscal first quarter, backed by gains from higher merchandise margins, lower commodity costs and better promotional activity.
The company has been on track with the execution of its Power Plan 2023, which focuses on opening highly profitable Old Navy and Athleta stores while closing the underperforming Gap and Banana Republic stores. Through the plan, the company expects to deliver consistent sales growth, margin expansion and a strong operating cash flow. Its first-quarter outlook assumes solid performances at Old Navy and Gap, offset by tough comparisons for Athleta and a longer recovery for Banana Republic.
However, the uncertain macro and consumer environments are expected to have taken a toll on Gap’s top-line performance in the to-be-reported quarter. Rising prices of essential commodities are likely to have hurt lower-income consumers' spending on non-essentials like apparel. On its last earnings call, management projected the fiscal first quarter to benefit from the timing shifts as the quarter excludes a low-volume week in February and includes a modestly larger week in May. It projects net sales to be flat year over year.
What the Zacks Model Unveils
Our proven model predicts a likely earnings beat for Gap this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Gap has an Earnings ESP of +15.47% and currently flaunts a Zacks Rank of 1.
Valuation Picture
From a valuation perspective, Gap shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 14.73X, below the Retail-Apparel & Shoes industry’s average of 16.01X, the stock offers compelling value for investors seeking exposure to the sector. Additionally, the stock currently has a Value Score of A, further validating its appeal.
Recent market movements show that Gap’s shares have gained 0.3% in the year-to-date period compared with the industry’s rise of 14.8%. Trading at $20.98 as of May 24, shares of Gap are likely to gain momentum, as our proven model predicts that the company is likely to beat earnings estimates in the impending release.
Image Source: Zacks Investment Research
Other Stocks Poised to Beat Earnings Estimates
Here are some other companies, which, according to our model, have the right combination of elements to post an earnings beat:
Abercrombie & Fitch (ANF - Free Report) has an Earnings ESP of +2.53% and presently flaunts a Zacks Rank #1. The company is likely to register growth in the top and bottom lines when it reports first-quarter fiscal 2024 results. The consensus mark for ANF’s quarterly revenues is pegged at $952.3 million, which suggests 13.9% growth from the figure reported in the prior-year quarter.
The consensus mark for ANF’s quarterly earnings has moved up 2.5% in the past seven days to $1.66 per share. The consensus estimate suggests growth of 325.6% from the year-ago quarter’s actual.
American Eagle (AEO - Free Report) currently has an Earnings ESP of +3.98% and a Zacks Rank #3. The company is likely to register growth in the top and bottom lines when it reports first-quarter fiscal 2024 results. The consensus mark for AEO’s quarterly revenues is pegged at $1.2 billion, which suggests 6.2% growth from the figure reported in the prior-year quarter.
The consensus mark for AEO’s quarterly earnings has moved up by a penny in the past seven days to 28 cents per share. The consensus estimate suggests growth of 64.7% from the year-ago quarter’s actual.
Nordstrom (JWN - Free Report) presently has an Earnings ESP of +41.67% and a Zacks Rank of 3. The company is likely to register top-line growth when it reports first-quarter fiscal 2024 results. The consensus mark for JWN’s quarterly revenues is pegged at $3.2 billion, which suggests growth of 0.5% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Nordstrom’s loss per share has narrowed by a penny to 8 cents in the past seven days. The consensus estimate indicates a significant decline against earnings per share of 7 cents reported in the year-ago quarter.
Image: Bigstock
Here's How Gap (GPS) Is Positioned Ahead of Q1 Earnings
The Gap, Inc. (GPS - Free Report) is expected to register top and bottom-line growth when it reports first-quarter fiscal 2024 results on May 29, after the closing bell.
The Zacks Consensus Estimate for the fiscal first-quarter bottom line is pegged at 14 cents per share, suggesting significant growth from earnings of 1 cent reported in the year-ago quarter. The consensus estimate for the fiscal first-quarter earnings has moved up 16.7% in the past 30 days. For revenues, the consensus mark is pegged at $3.3 billion, indicating a 0.1% rise from the year-ago quarter’s reported figure.
In the last reported quarter, Gap’s earnings beat the Zacks Consensus Estimate by 145%. The company delivered an earnings surprise of 180.9%, on average, in the trailing four quarters.
The Gap, Inc. Price and EPS Surprise
The Gap, Inc. price-eps-surprise | The Gap, Inc. Quote
Key Factors to Note
Gap’s first-quarter fiscal 2024 performance is expected to have gained from improved margins, driven by lower airfreight and improved promotional activity. Lower advertising expenses and technology investments from cost-saving actions also bode well. The company has been aggressively undertaking cost-management actions, which are expected to have improved its performance in the to-be-reported quarter.
On the last reported quarter’s earnings call, management expected the gross margin to expand in the first quarter of fiscal 2024. This is likely to have been backed by merchandise margin expansion and commodity cost tailwinds. It expected to take a prudent approach with respect to the promotional environment in the first quarter.
We expect an adjusted gross margin expansion of 100 basis points for the fiscal first quarter, backed by gains from higher merchandise margins, lower commodity costs and better promotional activity.
The company has been on track with the execution of its Power Plan 2023, which focuses on opening highly profitable Old Navy and Athleta stores while closing the underperforming Gap and Banana Republic stores. Through the plan, the company expects to deliver consistent sales growth, margin expansion and a strong operating cash flow. Its first-quarter outlook assumes solid performances at Old Navy and Gap, offset by tough comparisons for Athleta and a longer recovery for Banana Republic.
However, the uncertain macro and consumer environments are expected to have taken a toll on Gap’s top-line performance in the to-be-reported quarter. Rising prices of essential commodities are likely to have hurt lower-income consumers' spending on non-essentials like apparel. On its last earnings call, management projected the fiscal first quarter to benefit from the timing shifts as the quarter excludes a low-volume week in February and includes a modestly larger week in May. It projects net sales to be flat year over year.
What the Zacks Model Unveils
Our proven model predicts a likely earnings beat for Gap this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Gap has an Earnings ESP of +15.47% and currently flaunts a Zacks Rank of 1.
Valuation Picture
From a valuation perspective, Gap shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 14.73X, below the Retail-Apparel & Shoes industry’s average of 16.01X, the stock offers compelling value for investors seeking exposure to the sector. Additionally, the stock currently has a Value Score of A, further validating its appeal.
Recent market movements show that Gap’s shares have gained 0.3% in the year-to-date period compared with the industry’s rise of 14.8%. Trading at $20.98 as of May 24, shares of Gap are likely to gain momentum, as our proven model predicts that the company is likely to beat earnings estimates in the impending release.
Image Source: Zacks Investment Research
Other Stocks Poised to Beat Earnings Estimates
Here are some other companies, which, according to our model, have the right combination of elements to post an earnings beat:
Abercrombie & Fitch (ANF - Free Report) has an Earnings ESP of +2.53% and presently flaunts a Zacks Rank #1. The company is likely to register growth in the top and bottom lines when it reports first-quarter fiscal 2024 results. The consensus mark for ANF’s quarterly revenues is pegged at $952.3 million, which suggests 13.9% growth from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus mark for ANF’s quarterly earnings has moved up 2.5% in the past seven days to $1.66 per share. The consensus estimate suggests growth of 325.6% from the year-ago quarter’s actual.
American Eagle (AEO - Free Report) currently has an Earnings ESP of +3.98% and a Zacks Rank #3. The company is likely to register growth in the top and bottom lines when it reports first-quarter fiscal 2024 results. The consensus mark for AEO’s quarterly revenues is pegged at $1.2 billion, which suggests 6.2% growth from the figure reported in the prior-year quarter.
The consensus mark for AEO’s quarterly earnings has moved up by a penny in the past seven days to 28 cents per share. The consensus estimate suggests growth of 64.7% from the year-ago quarter’s actual.
Nordstrom (JWN - Free Report) presently has an Earnings ESP of +41.67% and a Zacks Rank of 3. The company is likely to register top-line growth when it reports first-quarter fiscal 2024 results. The consensus mark for JWN’s quarterly revenues is pegged at $3.2 billion, which suggests growth of 0.5% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Nordstrom’s loss per share has narrowed by a penny to 8 cents in the past seven days. The consensus estimate indicates a significant decline against earnings per share of 7 cents reported in the year-ago quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.