The Gap (NYSE:
), which is trading near a 52-week high, is scheduled to report its
second-quarter 2012 results Thursday, August 16, after the markets
close. Investors will be hoping that the company continues to offer
revenue growth, good cash flow from operations and expanding profit
Analysts on average predict that Gap will report per-share
earnings of $0.48 for the three months that ended in July, as well
as $3.55 billion in revenue. In the same period of last year, the
company reported a profit of $0.35 per share and $3.39 billion in
revenue. Analysts have become more bullish as their earnings per
) estimate has risen in the past 60 days from $0.37. Note that
analysts underestimated Gap's per-share earnings in each of the
past six quarters. First-quarter earnings exceeded consensus EPS
expectations by a penny per share.
The company said in the first-quarter report that its
better-than-expected results were due in part to revenue gains at
its Old Navy, Gap and Banana Republic chains, as well as strong
online sales. The results prompted Gap to raise its full-year EPS
outlook. The share price rose about 8 percent immediately following
Looking ahead to the current quarter, the consensus forecast
calls for sequential and year-over-year growth of both EPS and
revenue. And so far, analysts expect full-year per-share earnings
growth of about 25 percent, as well as for revenue to be about 6
percent higher than in the previous year.
San Francisco-based The Gap Inc. is a specialty retailer that
offers apparel, accessories and personal care products for men,
women, children and babies under the Gap, Old Navy, Banana Republic
and other brand names. The company has approximately 3,000
company-operated stores and 200 franchise stores in 90 countries.
The company is an S&P 500 component with a market
capitalization of about $17 billion. It was founded in 1969.
Competitors include Abercrombie & Fitch (NYSE:
) and American Eagle Outfitters (NYSE:
), as well as big-box stores like Target (NYSE:
). Abercrombie said this week that its earnings and sales both
fell, partly due to the recession in Europe, but EPS were in line
with analysts' low expectations. American Eagle is scheduled to
post results next week, and its per-share profit is forecast to
have doubled year over year.
During the three months that ended in July, Gap opened first Old
Navy store outside of North America -- in Tokyo. The company
reported sales growth in April, May and June, announced a
back-to-school joint venture between Old Navy and Office Depot
(NYSE: OPD) and its Piperlime online shop announced it will open
its first retail store in New York City.
Gap's long-term EPS growth forecast is near 10 percent. Its
operating margin is higher than the industry average, and the
return on equity is a more than 24 percent. The dividend yield is
near 1.4 percent. But of 28 analysts who follow the stock surveyed
by Thomson/First Call, only nine rate the shares at Buy or Strong.
The current share price has overrun the analysts' mean price
target, so the stock may be due for updated targets after the
Stronger-than-expected sales in July has pushed the stock more
than 23 percent higher in the past month, and the share price is up
nearly 87 percent year to date. The share price is well above the
50-day and 200-day moving averages. Over the past six months, the
stock has outperformed all three of the competitors mentioned
above, as well as the broader markets.
(c) 2012 Benzinga.com. Benzinga does not provide investment advice.
All rights reserved.