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NEW YORK (

TheStreet

)

-- Gap

(NYSE:

GPS

) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, good cash flow from operations, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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    Highlights from the ratings report include:

      • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 47.84% over the past year, a rise that has exceeded that of the S&P 500 Index. 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.
      • Despite its growing revenue, the company underperformed as compared with the industry average of 8.3%. Since the same quarter one year prior, revenues slightly increased by 5.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
      • Net operating cash flow has significantly increased by 57.57% to $364.00 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 2.12%.
      • GAP INC has improved earnings per share by 17.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GAP INC reported lower earnings of $1.57 versus $1.89 in the prior year. This year, the market expects an improvement in earnings ($1.91 versus $1.57).
      • 43.60% is the gross profit margin for GAP INC which we consider to be strong. Regardless of GPS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GPS's net profit margin of 6.70% compares favorably to the industry average.

      TheStreet Recommends

      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. The company has a P/E ratio of 16.8, equal to the average retail industry P/E ratioand below the S&P 500 P/E ratio of 17.7. Gap has a market cap of $13.37 billion and is part of the

      services

      sector and

      retail

      industry. Shares are up 47.3% year to date as of the close of trading on Wednesday.

      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.

      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.

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