Gap (GPS) Stock Sinks As Market Gains: What You Should Know

This story originally appeared on Zacks

In the latest trading session, Gap (GPS) closed at $17.01, marking a -0.58% move from the previous day. This move lagged the S&P 500’s daily gain of 0.52%. At the same time, the Dow lost 0.06%, and the tech-heavy Nasdaq gained 0.11%.

Prior to today’s trading, shares of the clothing chain had lost 7.81% over the past month. This has was narrower than the Retail-Wholesale sector’s loss of 11.17% and lagged the S&P 500’s loss of 6.51% in that time.

Investors will be hoping for strength from Gap as it approaches its next earnings release. In that report, analysts expect Gap to post earnings of -$0.12 per share. This would mark a year-over-year decline of 142.86%. Meanwhile, our latest consensus estimate is calling for revenue of $4.53 billion, up 2.46% from the prior-year quarter.

Any recent changes to analyst estimates for Gap should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company’s business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 10.32% lower. Gap is currently sporting a Zacks Rank of #5 (Strong Sell).

Looking at its valuation, Gap is holding a Forward P/E ratio of 9.32. This valuation marks a discount compared to its industry’s average Forward P/E of 10.38.

Also, we should mention that GPS has a PEG ratio of 0.78. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. GPS’s industry had an average PEG ratio of 0.74 as of yesterday’s close.

The Retail – Apparel and Shoes industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 186, which puts it in the bottom 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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