Here's Why Gap (GPS) Stock Appears a Promising Bet Now

20.06.24 13:59 Uhr

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The Gap, Inc. GPS stock is well-poised to tap the positive trends in the fashion arena, thanks to its robust strategic initiatives. The company has been gaining from brand strength and solid demand for its products that resonate well with customers.Buoyed by such strengths, shares of this clothing and accessories retailer have gained 23.2% compared with the industry’s 16.4% growth in the past six months. A VGM Score of A further adds strength to this Zacks Rank #1 (Strong Buy) company.Let’s Delve DeeperGap is aggressively undertaking cost-control actions. The company has been simplifying and optimizing its operating model and structure, including increasing spans of control and decreasing management levels, to improve the quality and speed of decision-making. It is also creating a consistent organizational structure across its brands. Gap is focused on actioning more than $550 million in annualized cost savings and realizing margin expansion on lower air costs, improved discounting and effective sourcing strategies.The company has been gaining from lower airfreight and improved promotional activity. This has been aiding the company’s margins and, in turn, the overall profitability. During first-quarter fiscal 2024, the gross margin expanded 400 basis points (bps) year over year. The merchandise margin also grew 330 bps, benefiting from lower commodity costs. Rent, occupancy and depreciation, as a rate of sales, leveraged 70 bps year over year.Image Source: Zacks Investment ResearchManagement is committed to creating a trend-right merchandise assortment, deepening relations with customers via marketing, enhancing the digital commerce agenda and efficiently controlling expenses. Gap’s sturdy execution of its Power Plan 2023 Strategy, which is focused on opening highly profitable Old Navy and Athleta stores while closing the underperforming Gap and Banana Republic stores, has also been contributing to its results.Such efforts have helped the company post robust fiscal first-quarter results, wherein both the top and bottom lines beat the Zacks Consensus Estimate and increased year over year. Both comparable sales and store sales rose 3% year over year. Online sales grew 5% year over year, accounting for 38% of the total sales. The majority of the company’s brands performed well in the fiscal first quarter. Net sales at Old Navy Global increased 5% year over year while the metric rose 2% each at Banana Republic and Athleta. Net sales remained flat year over year at Gap Global.Going forward, management anticipates commodity cost tailwinds in the first half of the fiscal year that are likely to become largely neutral in the second half, resulting in approximately 100 bps of gross margin leverage for the full year. For fiscal 2024, it now projects sales to grow slightly year over year on a 52-week basis compared with flat sales predicted earlier. The company expects gross margin expansion of at least 150 bps. It also anticipates operating income to grow in the mid-40% range.The Zacks Consensus Estimate for GPS’ fiscal 2024 sales and earnings per share is pegged at $14.92 billion and $1.74, respectively, indicating growth of 0.2% and 21.7% year over year. This highlights analysts’ confidence in the stock. Given all the positives, Gap stock seems to deserve a place in your investment portfolio.Other Key PicksBelow, we have highlighted three other top-ranked stocks, namely Abercrombie ANF, DICK'S Sporting DKS and Tractor Supply TSCO.Abercrombie, a leading apparel retailer, currently sports a Zacks Rank of 1. ANF delivered an average earnings surprise of 210.3% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Abercrombie’s current financial-year sales implies growth of 10.4% from the year-ago reported figure.DICK'S Sporting, a sporting goods retailer, currently carries a Zacks Rank #2 (Buy). DKS delivered an average earnings surprise of 4.7% in the trailing four quarters.The consensus estimate for DICK'S Sporting’s current financial-year sales indicates growth of 1.8% from the year-ago reported figure.Tractor Supply, the largest retail farm and ranch store chain in the United States, currently carries a Zacks Rank of 2. TSCO delivered an average earnings surprise of 2.7% in the trailing four quarters.The Zacks Consensus Estimate for Tractor Supply’s current financial-year sales indicates growth of 3% from the year-ago reported figure.Free Report – 3 Stocks Sneaking Into Hydrogen Energy Demand for clean hydrogen energy is projected to reach $500 billion by 2030 and grow 5-FOLD by 2050. No guarantees, but three companies are quietly getting the jump on their competition.Zacks Investment Research is temporarily offering an urgent Special Report naming and explaining these emerging powerhouses primed to boom. Click below for Hydrogen Energy: 3 Industrial Giants to Ride the Next Renewable Energy Wave.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Abercrombie & Fitch Company (ANF): Free Stock Analysis Report Tractor Supply Company (TSCO): Free Stock Analysis Report The Gap, Inc. (GPS): Free Stock Analysis Report DICK'S Sporting Goods, Inc. (DKS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks

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Nachrichten zu Gap Inc.

Analysen zu Gap Inc.

DatumRatingAnalyst
21.11.2018Gap NeutralB. Riley FBR
21.11.2018Gap OutperformTelsey Advisory Group
19.10.2018Gap BuyStandpoint Research
11.10.2018Gap NeutralWedbush Morgan Securities Inc.
24.08.2018Gap NeutralB. Riley FBR
DatumRatingAnalyst
21.11.2018Gap OutperformTelsey Advisory Group
19.10.2018Gap BuyStandpoint Research
15.05.2018Gap OutperformTelsey Advisory Group
17.11.2017Gap OverweightBarclays Capital
20.09.2017Gap OverweightBarclays Capital
DatumRatingAnalyst
21.11.2018Gap NeutralB. Riley FBR
11.10.2018Gap NeutralWedbush Morgan Securities Inc.
24.08.2018Gap NeutralB. Riley FBR
10.08.2018Gap NeutralWedbush Morgan Securities Inc.
02.03.2018Gap NeutralB. Riley FBR, Inc.
DatumRatingAnalyst
20.05.2016Gap UnderperformMizuho
10.05.2016Gap UnderperformWolfe Research
10.05.2016Gap UnderperformMizuho
20.11.2015Gap SellUBS AG
20.11.2015Gap UnderperformMizuho

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