The Gap, Inc. Reports a Rise in Q3 Profits; Raises Guidance for the Full Year (GPS)

After hours on Thursday fashion retailer The Gap Inc. (GPS), owner of the Gap, Banana Republic, and Old Navy, reported a rise in earnings for the third quarter, easing fears of a possible slowdown. The company has also raised its earnings outlook for the year.

The San Francisco, California-based company posted a third quarter net income of $308 million, or 63 cents per share, up +59.6% from last year’s third quarter net income of $193 million, or 38 cents per share. On average Wall Street analysts expected the company to earn 63 cents per share, according to Thomson Reuters.

Revenue for the company rose +8% to $3.86 billion. The positive turnaround in sales and earnings has been due to a re-branding of the classic Gap look as well as a successful marketing tie-in campaign with Banana Republic and the television show Mad Men.

Looking forward, GPS now expected to earn between $2.20 and $2.25 a share for the year, up from its previous forecast of $1.95 to $2.00 earnings per share. Wall Street expects the firm to earn $2.27 a share.

Gap shares were up $1.72, or +5.17%, in premarket trading on Friday.

The Bottom Line
Shares of The Gap (GPS) have a 1.50% dividend yield, based on last night’s closing stock price of $10.30. The stock has technical support in the $9 price area. If the shares can firm up, we see overhead resistance around the $11.50-$12.00 price levels.

The Gap Inc. (GPS) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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