) reached a new 52-week high of $43.39 on Jul 5, 2013, thereby
beating its previous high of $43.36 on Jul 2, and eventually
closed trade at $43.30. The average volume of shares traded over
the last 3 months is approximately 3,630K. Moreover, the company
currently trades at a forward P/E of 15.97x, a 28.3% discount to
the industry average of 22.27x.
We believe that the strong price appreciation in recent times
is primarily attributable to the stock reaching its ex-dividend
date of Jul 8. Apart from this, the stock's momentum is driven by
the company's consistent positive earnings surprise trend, strong
revenue growth, impressive management guidance and strategies to
expand its global reach.
Gap is one of the leading players in the highly fragmented
specialty retail sector, offering a diverse range of clothing,
accessories and personal care products for men, women, children
and infants. We believe that its flagship brands - including Gap,
Banana Republic, Old Navy, Piperlime and Athleta - complement one
another, thereby strengthening the company's position among
This was apparent from the past quarter, in which Gap posted
impressive top and bottom-line performances, which easily
surpassed the Zacks Consensus Estimate. With respect to earnings
surprises, Gap has topped the Zacks Consensus Estimate in 3 of
the trailing 4 quarters with an average beat of 2.6%.
Moreover, Gap witnessed resurgence in its comparable sales and
total sales performances, driven by its consistent endeavors to
remain buoyed on the growth trajectory. During the period from
Jan to May 2013, the company registered positive year-over-year
comparable store sales growth in each month, except for
Furthermore, in early June, Gap announced plans to further its
global expansion plans with the opening of franchise and
standalone stores in Paraguay, Hungary and Mexico. Apart from
this, the company is planning to extend its international
operations to 8 Latin American countries - including Chile,
Panama, Colombia, Mexico, Uruguay, Paraguay, Peru and Brazil.
Gap has been striding ahead with its long-term plans by
reducing dependency on the North American specialty business,
while increasing its online presence and expanding international
operations. Moreover, Gap aims to generate 30% of its total sales
from overseas operations and online business in 2013, versus 27%
in fiscal 2012.
Other stocks in the retail space that touched new 52-week
highs on Jul 5 are
), which reached $197.62, $62.10 and $43.01, respectively.
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