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, good cash flow from operations and growth in earnings per share. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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Highlights from the ratings report include:

  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Specialty Retail industry average. The net income increased by 28.6% when compared to the same quarter one year prior, rising from $189.00 million to $243.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.7%. Since the same quarter one year prior, revenues slightly increased by 5.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 40.00% and other important driving factors, this stock has surged by 108.88% 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.
  • Net operating cash flow has significantly increased by 84.75% to $606.00 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 -22.43%.
  • GAP INC has improved earnings per share by 40.0% 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 ($2.08 versus $1.57).

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 19.7, below the average retail industry P/E ratio of 21.1 and above the S&P 500 P/E ratio of 17.7. Gap has a market cap of $16.95 billion and is part of the

services

sector and

retail

industry. Shares are up 90.4% 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.

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