The Gap, Inc. (GPS) has a history of momentum ahead of earnings

84 days have passed by since the last earnings report for The Gap, Inc. (NYSE:GPS) and the new quarterly results look set to arrive today. The shares of GPS at the moment are trading at a volume of 11.5 million, which compares with its normal daily standard volume of 6778054 shares. This has led to the shares of the company advancing by 3.99%, currently exchanging hands at $16.96 a share. GPS stock has been up by $16.02 (-48.57%) ever since it reached its 52-week high of $32.98 back in August 22, 2018. It has progressed below its 50-day moving average of $18.15 and is up 2.6% over the past week. The stock has retreated -20.8% since the last one arrived so the question here is that will the downbeat trend in that time frame continue leading up to its next earnings release, or is the GPS share price due for a breakout?

The Gap, Inc. (GPS) Forecasts And Latest Quarter Earnings

Ahead of their fiscal second-quarter to be released on Thursday, Aug 22, 2019, 21 analysts who are covering the company are estimating that it will record a profit of $0.53 per share, with analysts having different outlooks from $0.46 to $0.57. The current agreed outlook, when compared to the profit recorded last year, is at $0.76 a share, thus a decrease of -30.26% is expected. The profit view for a complete financial year for The Gap, Inc. is expected to be around $2.06 in current year, a growth of nearly -20.46% from last year which was $2.59.

Let’s now look at their sales section, GPS’s revenue is estimated to be $4.08B, a figure which is less than the $4.08B recorded for Q2 last year. Their sequential sales though are expected to grow by 8.36% from their Q1’s sales which were $3.71B. Their full-year outlook is pegged at $16.49B, implying that there would be a drop of -0.54% over the $16.58B they recorded last year in revenue. The Gap, Inc. is projected to get sales lifted by 0.91% in the next quarter, with a revenue target of $16.64B.

Analyzing The Earnings History Of The Gap, Inc. (NYSE:GPS)

In the past few years, the GPS stock has been known to miss the Wall Street’s earnings projection. The company missed 16% of the time, according to the data pulled on their earnings, was able to meet predictions on 2 occasions and topped expectations 8 times. Looking at the past trend, the price of The Gap, Inc. shares had risen following the release of their earnings in 19 of the last 37 quarters.

Looking back, here is how The Gap, Inc. (GPS) stock reacted to earnings misses and beats. It gave investors reason to cast doubts with the price going down after 2 of the last four earnings reports. The shares of The Gap, Inc. recorded -9.32%, 16.18%, 4.66% and -8.6%, respectively, on the first day of past earnings releases. After a week of earnings reports, the changes were -12.72%, 5.2%, 7.34% and -7.06%. Their post-earnings price movements have resulted in an average increase of 0.73% and an average decrease of -1.81% in The Gap, Inc. on next day and 7th day, sequentially. GPS’s one month stock performance led to its shares declining by -9.35% with a return of -47.28% witnessed over the last 52 weeks.

The lower number of analysts at Reuters has assigned a buy or better ratings (3) on the The Gap, Inc. stock, while 18 of them have a rating of a Hold with the 11-year target price suggested by the analysts standing at $21.11. This price target implies potential upside of 24.47 percent over the next 12 months based on the current share price.

The Gap, Inc. (GPS) Post Earnings Announcement Drift (PEAD)

Back on May 30, 2019, The Gap, Inc. (NYSE:GPS) released its Q1 results, in which it recorded EPS of $0.24 that fell short of consensus estimates of $0.32. After the earnings were reported, the price of GPS stock kicked off the session at $17.12 and remained in a range of $17.45 to $18.73 on the first day. The shares were priced at $18.68 at the close with a total volume of shares being 32201452.

On February 28, 2019, the Q4 earnings report was disclosed with EPS of $0.72. This was above the estimation of $0.68 per share. The stock price range of GPS was between $30 and $31.39 on the first-day post announcement, after opening the day at $29.36. The session came to close at $29.51 and there was a total volume of 41864920 shares.

November 20, 2018 was the day when its Q3 results were unveiled. The earnings came in at $0.69, beating the projected $0.68 per share. The very next day, GPS stock opened at $24.88 while staying in a range of $25 to $26.11. At the end, it moved to $25.81 a total volume of shares been 7272033.

In the year-ago Q2 earnings on August 23, 2018, the company saw profit per share of $0.76. That was better than the $0.72 analysts had expected. The Gap, Inc. share price started at $28.57 on the first full trading day post-earning and then exchanged hands between $29.66 and $30.19 throughout the session. The closing price of $29.65 came on the back of 18666456 shares in volume.

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