Gap (GPS) Stock Gains in After-Hours Trading on Strong November Sales

NEW YORK (TheStreet) -- Shares of Gap (GPS) were gaining 3.8% to $42.10 after-hours Thursday after the clothing retailer reported its November sales results.

Gaps said that net sales increased 6% in November to $1.72 billion, up from $1.63 billion in November, 2013.

Comparable store sales grew 6% in November for the company, up from 2% growth in November, 2013. Comparable store sales increased 18% for Old Navy stores, and 2% for Banana Republic stores. Comparable store sale fell 4% for Gap brand stores.

Must Read: Warren Buffett's 25 Favorite Stocks

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

"Old Navy delivered standout performance in November, with customers responding positively to the brand's holiday assortment and marketing," chairman and CEO Glenn Murphy said. "With much of the holiday season still ahead, we remain focused on strong execution across all of our brands."

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 largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels.
  • Net operating cash flow has increased to $118.00 million or 22.91% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -10.81%.
  • 40.15% 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 8.84% compares favorably to the industry average.
  • GAP INC has improved earnings per share by 11.1% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, GAP INC increased its bottom line by earning $2.75 versus $2.32 in the prior year. For the next year, the market is expecting a contraction of 0.5% in earnings ($2.74 versus $2.75).
  • You can view the full analysis from the report here: GPS Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

More from Markets

Global Rally Stalls as Trump Doubts North Korea Summit, Questions China Trade

Global Rally Stalls as Trump Doubts North Korea Summit, Questions China Trade

Trump, China Trade, Target and Las Vegas Casinos - 5 Things You Must Know

Trump, China Trade, Target and Las Vegas Casinos - 5 Things You Must Know

Stocks Move Lower on Trade Fears and 4 Other Stories You Must Know Wednesday

Stocks Move Lower on Trade Fears and 4 Other Stories You Must Know Wednesday

Target Slumps After Q1 Earnings Miss as Comparable Sales Slow, Traffic Improves

Target Slumps After Q1 Earnings Miss as Comparable Sales Slow, Traffic Improves

Pound Slides as Inflation Slows, Doubts Grow Over Bank of England Rate Hikes

Pound Slides as Inflation Slows, Doubts Grow Over Bank of England Rate Hikes