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Omar Venerio
Omar Venerio
Articles (920) 

Gap Soars 5.6% After Beating Estimates

The stock rallies on the back of a positive surprise

July 13, 2017 | About:

The U.S. stock markets were up today, with the Dow hitting an all-time high and financial and energy stocks leading the advance. Among the winners today is Gap Inc. (NYSE:GPS).

In Thursday trading, Gap’s stock advanced 5.6% on the back of the company reporting its financial results for the first quarter of fiscal 2017. The company posted diluted EPS of 36 cents, which represents an increase of 12.5% from the prior-year quarter. Further, the company reaffirmed its full-year diluted EPS guidance between $1.95 and $2.05. The company’s net sales of $3.4 billion were flat compared to the same quarter a year ago. Moreover,the operating margin for the period was 7.4%, up from 6.5% last year. The company managed to beat EPS expectations by seven cents. Revenue also beat the consensus estimate by $50 million.

Art Peck, Gap's president and CEO, said "he is pleased with the company's positive comp and earnings growth".

“We've made substantial improvements in product quality and fit, and our increasing responsive capabilities are enabling us to better react to trends and demand," Peck said. "While the retail environment continues to be challenging, we are focused on delivering the best possible product and customer experience, and our ability to leverage a portfolio of iconic brands and operatingscale uniquely positions the company for long-term growth."

In addition, the company distributed approximately $190 million to shareholders through share repurchases and dividends.

Joel Greenblatt (Trades, Portfolio)’s Gotham Asset Management is the major shareholder of the company with 1.14 million shares, valued at $27.6 million at the end of March. Manning and Napier Advisors Inc. boosted its position by 9% in the first quarter to 91,713 shares. On the other hand, Edward Lampert (Trades, Portfolio) sold out, while Murray Stahl (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Ray Dalio (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) reduced their positions.

Disclosure: The author holds no position in any stocks mentioned.

About the author:

Omar Venerio
Omar Venerio is capital markets, derivatives, corporate finance and financial management professor. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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