The 10-second takeaway
For the quarter ended July 28 (Q2), Gap beat slightly on revenues and beat slightly on earnings per share.
Compared to the prior-year quarter, revenue improved and GAAP earnings per share improved significantly.
Margins grew across the board.
Gap logged revenue of $3.58 billion. The three analysts polled by S&P Capital IQ expected to see revenue of $3.52 billion on the same basis. GAAP reported sales were 5.6% higher than the prior-year quarter's $3.39 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.49. The 22 earnings estimates compiled by S&P Capital IQ anticipated $0.48 per share. GAAP EPS of $0.49 for Q2 were 40% higher than the prior-year quarter's $0.35 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 39.9%, 300 basis points better than the prior-year quarter. Operating margin was 11.9%, 210 basis points better than the prior-year quarter. Net margin was 6.8%, 120 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $3.77 billion. On the bottom line, the average EPS estimate is $0.51.
Next year's average estimate for revenue is $15.43 billion. The average EPS estimate is $2.09.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 516 members out of 835 rating the stock outperform, and 319 members rating it underperform. Among 264 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 163 give Gap a green thumbs-up, and 101 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Gap is hold, with an average price target of $29.42.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.