Gap Cruises Ahead of Expectations Once Again in 4Q17



Series snapshot

San Francisco–based Gap (GPS) reported its results for 4Q17 and fiscal 2017 after the market closed on March 1, 2018. The results relate to the three-month and 12-month periods ended February 3, 2018.

Once again, the company beat Wall Street’s top- and bottom-line expectations. Revenue rose 7.9% YoY (year-over-year) to $4.8 billion, $110 million higher than analysts’ estimate. Its EPS (earnings per share) rose 19.6% YoY to $0.61, beating the estimate by $0.03.

For more details about Gap’s 4Q17 and fiscal 2017 performance, read Part 2 and 3 of this five-part series. In Part 4, we’ll discuss management’s upbeat guidance for fiscal 2018 and possible effects of tax reform.

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Stock performance and recommendations

Gap’s strong quarterly results were well received by investors. The apparel retailer’s stock rose 7.8% the next trading day. The company is now trading at a one-year forward price-to-earnings multiple of 13x, in line with its three-year average of 12.5x.

There were no post-results rating changes for the stock, though a couple of analysts raised their price targets—we’ll discuss analysts’ views further in Part 5.

About Gap

Gap sells apparel, accessories, and personal care products in more than 90 countries. The company’s portfolio of brands includes Gap, Banana Republic, Old Navy, and Athleta. It operates through 3,200 company-operated stores, 450 franchise stores, and e-commerce sites. Investors seeking exposure to Gap could consider the First Trust Consumer Discretionary AlphaDEX ETF (FXD), which invests 1.1% of its holdings in the company.


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