Gap Inc. (GPS: NYE) stock soared over 17% in extended trading yesterday after the company reported better-than-expected 3rd quarter earnings results. Gap beat Wall Street estimates for both earnings and revenue, sending its shares up as much as 18% in after-hours trading.
Key Findings from the Q3 Earnings:
Here are the key highlights from the Gap Q3 earnings report:
- Adjusted earnings per share: $0.59 vs. $0.20 consensus estimate.
- Revenue: $3.77 billion vs. $3.61 billion consensus estimate.
- Comparable-store sales: -2% vs. -7% consensus estimate.
Despite a 6.7% decline in year-over-year revenue, Gap’s performance was impressive considering the ongoing challenges facing the retail industry. The company’s better-than-expected results were driven by strong online sales and cost-cutting measures.
Gap’s online sales grew 12% year-over-year, reflecting the company’s continued focus on e-commerce. The company also benefited from cost-cutting measures, which helped to offset the impact of lower brick-and-mortar sales.
Gap Sees Positive Future Outlook:
Despite the challenges facing the retail industry, Gap is optimistic about its future. The company expects to generate full-year revenue of $13.1 billion to $13.5 billion, which would be in line with Wall Street estimates. Gap is also confident in its ability to grow its online business. The company expects its online sales to reach $5 billion by 2026, up from $3.4 billion in 2022.
Following Gap’s strong quarterly report, several analysts upgraded the company’s stock. Bank of America upgraded Gap to buy from neutral with a price target of $17 per share. Morgan Stanley upgraded Gap to overweight from equal weight with a price target of $16 per share.
Conclusion:
Gap’s impressive third-quarter results are a testament to the company’s ongoing transformation. The company is well-positioned for future growth, thanks to its strong online business, cost-cutting initiatives, and optimistic outlook. Investors should continue to watch Gap closely as it executes its turnaround plan.
Muzzammil is a content writer at Stock Target Advisor. He has been writing stock news and analysis at Stock Target Advisor since 2023 and has worked in the financial domain in various roles since 2020. He has previously worked on an equity research firm that analyzed companies listed on the stock markets in the U.S. and Canada and performed fundamental and qualitative analyses of management strength, business strategy, and product/services forecast as indicated by major brokers covering the stock.
