Gap Earnings: Revenue Increase Helps Margin, Net Income Climbs

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S&P 500 (NYSE:SPY) component The Gap Inc. (NYSE:GPS) reported its results for the third quarter. The Gap is an international specialty retailer that sells casual apparel, accessories and personal care products for men, women, and children.

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The Gap Inc. Earnings Cheat Sheet

Results: Net income for The Gap Inc. rose to $308 million (63 cents per share) vs. $193 million (38 cents per share) in the same quarter a year earlier. This marks a rise of 59.6% from the year-earlier quarter.

Revenue: Rose 7.8% to $3.86 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: The Gap Inc. fell in line with the mean analyst estimate of 63 cents per share. It beat the average revenue estimate of $3.46 billion.

Quoting Management: “We’re very pleased with our strong third quarter financial performance, highlighted by how well customers have responded to our product,” said Glenn Murphy, chairman and chief executive officer of Gap Inc. “We are ready to compete and win this holiday season as we drive to build upon our top line growth.”

Key Stats:

The company fell in line with estimates last quarter after beating expectations in the previous two quarters. In the second quarter, it topped the mark by one cent, and in the first quarter, it was ahead by one cent.

Revenue has now gone up for three straight quarters. In the second quarter, revenue rose 5.6% to $3.58 billion while the figure rose 5.8% in the first quarter from the year earlier.

Net income has increased 2.3% year-over-year on average across the last five quarters. The biggest gain came in the most recent quarter, when income climbed 59.6% from the year-earlier quarter.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from 64 cents a share to 68 cents over the last sixty days. Over the past three months, the average estimate for the fiscal year has climbed from $2.07 per to share to $2.25.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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