uploads/2018/02/4-26.jpg

Gap Stock: How It’s Been Performing

By

Updated

Gap’s stock performance

Gap’s (GPS) deteriorating same-store sales and unimpressive bottom-line performance impacted its stock in 2015 and 2016. The company lost 43% and 9%, respectively, during those years.

However, a change in strategy resulted in a financial turnaround, and the company reaped the benefits in the stock market. The stock surged a massive 52% in 2017, putting the fashion retailer among the best-performing apparel companies.

In comparison, apparel company Hanesbrands (HBI) fell 3% in 2017, while Ralph Lauren (RL) and VF Corporation (VFC) soared 15% and 39% during the year. PVH (PVH) was another star performer, with its stock recording gains similar to Gap.

Gap stock has fallen 5% so far this year. It fell 5.3% on February 20, 2018, after the CEO (chief executive officer) of the Gap brand parted ways with the company.

Article continues below advertisement

Gap’s total stock returns

Gap has a strong balance sheet. Its balance sheet cash stood at $1.4 billion at the end of 3Q17. The company uses its strong cash position to fund dividends and buy back its shares.

The company repurchased 3.8 million shares during the third quarter of 2017 for ~$100 million. It expects to spend another $100 million on share buybacks in the fourth quarter.

Gap increased its dividend per share at a compound annual growth rate of 18% between fiscal 2010 and fiscal 2015. However, it has kept its dividends unchanged over the last two years and has been paying a fixed per share dividend of $0.23.

For the fourth quarter, the company announced a DPS (dividend per share) of $0.23. The annualized DPS for fiscal 2017 stands at $0.92 cents.

Comparing Gap’s dividend yield to other apparel players

Gap has a dividend payout of 42%, which is similar to Hanesbrands and lower than VF Corporation (70%), Tapestry (TPR) (120%), and Ralph Lauren (RL) (110%).

However, Gap has a better dividend yield than most of its peers. Its one-year forward dividend yield stands at 2.9%, which is better than VF Corporation (2.5%), Ralph Lauren (1.9%), and Tapestry (2.7%). Hanesbrands, however, has a higher dividend yield of 3.1%.

Investors wanting exposure to Gap through ETFs can consider the SPDR S&P Retail ETF (XRT), which invests 1% of its holdings in Gap.

Advertisement

More From Market Realist