Gap’s stock market performance
Weak same-store sales and a poor bottom-line performance have affected Gap’s stock market returns over the last two years. The company lost 9% of its value in 2016 after falling 43% in 2015.
2017 has been a better year for Gap’s investors though. To date, the company gained 7.2% as of January 16, 2017. The majority of the gains came after the company revised its fiscal 2016 earnings guidance on February 7, as it reported better-than-expected 4Q comps. The stock has risen 5.8% since then.
Gap has performed better than peers
Gap’s stock has done better than most other apparel players during the current year. Stock prices of VF (VFC), Hanesbrands (HBI), Ralph Lauren (RL), and Under Armour (UAA) have fallen 4.6%, 3.3%, 12%, and 25% YTD, respectively. Coach (COH) and Nike (NKE) have, however, risen 8% and 11%, respectively.
Gap’s stock offers better yield than peers
Gap has a strong balance sheet. The company had a cash balance of $1.5 billion at the end of 3Q16. It uses its strong cash position to fund dividends for its investors.
Gap increased its dividend per share at a compound annual growth rate of 15% between fiscal 2011 and fiscal 2016. The annualized dividend per share for fiscal 2016 stands at 93 cents a share.
The company currently has a dividend payout of 55%, which is higher than Hanesbrands at 31% and VF at 51%. Coach, however, has a dividend payout of 74%.
Gap stock offers a one-year forward dividend yield of 3.8%, which is better than that of VF at 3.3%, Hanesbrands at 2.7%, and Coach at 3.7%.
Investors looking to invest in Gap through ETFs can choose to invest in the SPDR MFS Systematic Growth Equity ETF (SYG), which invests 1.6% of its holdings in Gap.