NEW YORK (TheStreet) -- The Gap (GPS - Get Report) shares are down -5.5% to $44 on Friday after the retailer announced a 2% drop in August same store sales, short of analysts expectations of a 1.6% increase.
The Gap stores, which include Old Navy and Banana Republic among others, reported a 2% decline in online sales and sales from stores open for at least a year, while sales at its name sake store fell 6% during the month.
Today's performance follows a -6% decline the stock experienced in after-hours trading yesterday after the release of the August sales results.
TheStreet Ratings team rates GAP INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate GAP INC (GPS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GPS's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 2.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.47, is low and is below the industry average, implying that there has been successful management of debt levels.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market, GAP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- GAP INC has improved earnings per share by 17.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GAP INC increased its bottom line by earning $2.75 versus $2.32 in the prior year. This year, the market expects an improvement in earnings ($2.95 versus $2.75).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Specialty Retail industry average. The net income increased by 9.6% when compared to the same quarter one year prior, going from $303.00 million to $332.00 million.
- You can view the full analysis from the report here: GPS Ratings Report
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