Earnings expected to bottom Out
Wall Street analysts expect Gap’s adjusted EPS (earnings per share) to bottom out at the end of calendar year 2016. Thus, most analysts are recommending to hold the stock. Gap’s current PE (price-to-earnings) multiple is 10.0x, which is quite cheap compared to its peers like L Brands (LB), Ross Stores (ROST), and Urban Outfitters (URBN), which are trading at 26.3x, 22.5x, and 12.6x, respectively. The industry (XLY) is trading at 17.0x.
The consensus analyst recommendation for Gap’s (GPS) stock is a “hold.” As seen in the chart above, 60.5% of the analysts covering the stock have given it a hold. Five analysts have given Gap a “buy” recommendation, as they see Gap’s earnings bottoming out. Ten analysts from investment firms like UBS, Credit Suisse, and J.P Morgan have given it a “sell” recommendation.
The average 12-month target price of the company is $27.26, which means the stock has the potential to rise 8.0% in the next 12 months.