2024-05-31 13:30:45 ET
Summary
- Gap shares surged over 20% after reporting strong earnings results, indicating that its turnaround efforts are working.
- Q1 results showed a sales turnaround, with each of Gap's four brands reporting same-store sales growth, and improved inventory management has lifted margins, with gross margins increasing by 400 basis points.
- At 16.5x earnings, GPS stock is now largely reflecting strong 2024 results; with limited upside, the majority of the rally has likely already occurred, and the valuation appears fair.
GPS Stock Movement
Shares of The Gap, Inc. ( GPS ) surged over 20% on Friday after the company reported strong earnings results , adding more evidence that its turnaround is working. Shares have now more than tripled over the past year. I last covered Gap in November, rating shares a buy given my confidence in the turnaround, and the stock has since returned 70%. Given this rally and with new results, we should determine if now is a time to take profits....
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Gap Stock: A Stellar Q1 Justifies The Rally, But Further Upside May Be Limited