Trade-Ideas: Gap (GPS) Is Today's Post-Market Leader Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Gap ( GPS) as a post-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified Gap as such a stock due to the following factors:

  • GPS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $243.2 million.
  • GPS is up 2.3% today from today's close.

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More details on GPS:

The Gap, Inc. operates as an apparel retail company worldwide. It provides apparel, accessories, and personal care products for men, women, and children under the Gap, Banana Republic, Old Navy, Piperlime, Athleta, and Intermix brands. The stock currently has a dividend yield of 2.2%. GPS has a PE ratio of 14.1. Currently there are 7 analysts that rate Gap a buy, 1 analyst rates it a sell, and 17 rate it a hold.

The average volume for Gap has been 5.1 million shares per day over the past 30 days. Gap has a market cap of $17.1 billion and is part of the services sector and retail industry. The stock has a beta of 1.65 and a short float of 3.2% with 1.36 days to cover. Shares are up 2% year-to-date as of the close of trading on Tuesday.

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

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Gap as a buy. 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 ratings report include:
  • 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).

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

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