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Gap (GPS) Stock Declines While Market Improves: Some Information for Investors

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The latest trading session saw Gap (GPS - Free Report) ending at $23.97, denoting a -1.44% adjustment from its last day's close. The stock fell short of the S&P 500, which registered a gain of 0.55% for the day. Elsewhere, the Dow saw an upswing of 0.62%, while the tech-heavy Nasdaq appreciated by 0.63%.

The clothing chain's stock has dropped by 5.92% in the past month, falling short of the Retail-Wholesale sector's gain of 1.33% and the S&P 500's gain of 4.28%.

Analysts and investors alike will be keeping a close eye on the performance of Gap in its upcoming earnings disclosure. The company is expected to report EPS of $0.41, up 20.59% from the prior-year quarter. At the same time, our most recent consensus estimate is projecting a revenue of $3.63 billion, reflecting a 2.43% rise from the equivalent quarter last year.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $1.74 per share and revenue of $14.92 billion. These totals would mark changes of +21.68% and +0.22%, respectively, from last year.

Furthermore, it would be beneficial for investors to monitor any recent shifts in analyst projections for Gap. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Within the past 30 days, our consensus EPS projection has moved 3.75% higher. Gap is currently sporting a Zacks Rank of #1 (Strong Buy).

From a valuation perspective, Gap is currently exchanging hands at a Forward P/E ratio of 13.99. This indicates a discount in contrast to its industry's Forward P/E of 15.36.

One should further note that GPS currently holds a PEG ratio of 4.14. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. GPS's industry had an average PEG ratio of 2.29 as of yesterday's close.

The Retail - Apparel and Shoes industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 89, which puts it in the top 36% of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow GPS in the coming trading sessions, be sure to utilize Zacks.com.


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