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Gap Inc. Stock Buy Recommendation Reiterated (GPS)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Gap (NYSE: GPS) has been reiterated by TheStreet Ratings as a buy with a ratings score of A- . The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, solid stock price performance, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 59.6% when compared to the same quarter one year prior, rising from $193.00 million to $308.00 million.
  • GPS's revenue growth trails the industry average of 22.1%. Since the same quarter one year prior, revenues slightly increased by 7.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 65.78% and other important driving factors, this stock has surged by 78.09% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GPS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 44.80% is the gross profit margin for GAP INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 7.97% is above that of the industry average.
  • Net operating cash flow has significantly increased by 222.78% to $255.00 million when compared to the same quarter last year. In addition, GAP INC has also vastly surpassed the industry average cash flow growth rate of 13.26%.

The Gap, Inc. operates as a specialty retailer. The company offers apparel, accessories, and personal care products for men, women, children, and babies under the Gap, Old Navy, Banana Republic, Piperlime, and Athleta brand names. Gap has a market cap of $14.97 billion and is part of the services sector and retail industry. The company has a P/E ratio of 15.3, below the S&P 500 P/E ratio of 17.7. Shares are up 0.6% year to date as of the close of trading on Tuesday.

You can view the full Gap Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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