Gap Third Quarter Earnings Sneak Peek

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S&P 500 (NYSE:SPY) component Gap (NYSE:GPS) will unveil its latest earnings on Thursday, November 15, 2012. The Gap is an international specialty retailer that sells casual apparel, accessories and personal care products for men, women, and children.

Gap Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for net income of 63 cents per share, a rise of 65.8% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved up from 51 cents. Between one and three months ago, the average estimate moved up. It has risen from 54 cents during the last month. For the year, analysts are projecting profit of $2.25 per share, a rise of 44.2% from last year.

Past Earnings Performance: Last quarter, the company beat estimates by one cent, coming in at net income of 49 cents a share versus the estimate of profit of 48 cents a share. It marked the fourth straight quarter of beating estimates.

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A Look Back: In the second quarter, profit rose 28.6% to $243 million (49 cents a share) from $189 million (35 cents a share) the year earlier, exceeding analyst expectations. Revenue rose 5.6% to $3.58 billion from $3.39 billion.

Stock Price Performance: Between October 12, 2012 and November 9, 2012, the stock price dropped $2.48 (-6.9%), from $36.10 to $33.62. The stock price saw one of its best stretches over the last year between February 8, 2012 and February 23, 2012, when shares rose for 11 straight days, increasing 10.5% (+$2.24) over that span. It saw one of its worst periods between November 11, 2011 and November 25, 2011 when shares fell for 10 straight days, dropping 13.3% (-$2.71) over that span.

Wall St. Revenue Expectations: On average, analysts predict $3.82 billion in revenue this quarter, a rise of 6.7% from the year-ago quarter. Analysts are forecasting total revenue of $15.53 billion for the year, a rise of 6.7% from last year’s revenue of $14.55 billion.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.03 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company regressed in this liquidity measure from 2.16 in the first quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 9% to $2.24 billion while assets rose 2.1% to $4.54 billion.

Analyst Ratings: With 10 analysts rating the stock as a buy, three rating it as a sell and 10 rating it as a hold, there are indications of a bullish outlook.

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

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