Gap Stock Rises 11.2% Since Q4 Earnings Release: Buy Now or Wait?

The Gap, Inc. GAP has seen its shares rally 11.2% following the release of its robust fourth-quarter fiscal 2024 results on March 6, 2025. The stock has outperformed the industry’s decline of 5.9% and the broader Retail-Wholesale sector’s dip of 3.7% in the same period. The company’s share performance has also outpaced the S&P 500, which has fallen 3.1% since March 6.GAP Stock's Price Performance Image Source: Zacks Investment Research The company surpassed top and bottom-line expectations in fourth-quarter fiscal 2024, highlighting the effective execution of key strategies. Gaining market share for the eighth consecutive quarter underscores the brand strength and customer loyalty that Gap continues to build.Cost management remains a crucial factor, and management’s focus on operational efficiency, brand revitalization and cultural transformation suggests a long-term commitment to sustainable growth.Highlighting GAP’s Q4 ResultsGAP’s stock rally after its earnings release highlights investor optimism, driven by stronger-than-expected financial performance and a robust view. GAP’s earnings per share (EPS) surpassed the Zacks Consensus Estimate and improved 10% year over year in the fourth quarter of fiscal 2024. Quarterly results benefited from strength across its brands and market share growth for the eighth consecutive quarter. The company’s smooth progress in the reinvigoration of its brands and effective cost management aided results.The company’s better-than-expected sales reflected comparable sales (comps) growth of 3%, reflecting strong brand momentum. Its brands, except for Athena, reported positive comps in the quarter. Comps rose 3% for Old Navy, 7% for the Gap brand and 4% for Banana Republic, while it dropped 2% for Athena. GAP’s strong comps growth across key brands underscores the effectiveness of its brand reinvigoration strategies and market positioning.Old Navy Global continued its leadership as the number one specialty apparel brand and retailer in the United States, achieving its eighth consecutive quarter of market share gains. Additionally, the Gap brand reported comps growth for the fifth straight quarter and generated market share gains for the seventh consecutive quarter. Meanwhile, Banana Republic’s comps growth reflected successful efforts to reestablish the brand within its portfolio.GAP’s Upbeat FY25 Projections Boost SentimentGap’s outlook for fiscal 2025 reflects confidence in sustained growth and operational improvements. Management anticipates sales growth of 1-2%, driven by continued strength at Old Navy and Gap, stabilizing performance at Banana Republic, and a long-term recovery at Athleta. The company expects gross margin expansion, supported by disciplined execution and merchandise margin improvements.Additionally, Gap is driving meaningful cost efficiencies, with approximately $150 million in cost savings, part of which will be reinvested in future growth initiatives. Operating income is projected to increase 8-10%, reflecting continued financial discipline and strategic execution. For the first quarter of fiscal 2025, net sales are expected to remain flat or increase slightly, with a slight year-over-year improvement in gross margin and SG&A leverage.How are Estimates Faring for GAP Stock?The Zacks Consensus Estimate for GAP’s fiscal 2025 and 2026 EPS rose 9.3% and 4.6%, respectively, in the last seven days. The upward revisions in earnings estimates indicate that analysts are optimistic about the stock’s performance.For fiscal 2025, the Zacks Consensus Estimate for GAP’s sales and EPS implies 1.5% and 6.4% year-over-year growth. The consensus mark for fiscal 2026 sales and EPS indicates 2% and 7.1% year-over-year growth, respectively. Image Source: Zacks Investment Research How to Strategize Your GAP Stock Investment?Gap’s fourth-quarter results underscore its strong execution, brand momentum and financial resilience, positioning it for sustained growth. The company’s strategic initiatives aimed at brand reinvigoration, operational excellence, and cultural transformation are driving long-term value creation.With disciplined cost management, ongoing market share gains and a strengthened operating platform, Gap is well-equipped to navigate a dynamic retail landscape. Its solid financial position and optimistic fiscal 2025 outlook, projecting earnings and sales growth, further strengthen its investment appeal. Investors may consider this Zacks Rank #1 (Strong Buy) stock a compelling investment opportunity.Other Key PicksWe have highlighted three other top-ranked stocks in the broader sector, namely Boot Barn Holdings, Inc. BOOT, Urban Outfitters URBN and Deckers DECK.Boot Barn is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 21.4% and 14.9%, respectively, from the fiscal 2024 reported levels. BOOT delivered a trailing four-quarter earnings surprise of 7.2%, on average.Urban Outfitters, a fashion lifestyle specialty retailer, currently flaunts a Zacks Rank of 1. URBN delivered an earnings surprise of 28.4% in the trailing four quarters, on average.The consensus estimate for Urban Outfitters’ current financial-year sales indicates growth of 6% from the year-ago figure.Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It presently carries a Zacks Rank of 2 (Buy).The Zacks Consensus Estimate for DECK’s fiscal 2025 earnings and revenues implies growth of 20.6% and 15.6%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter earnings surprise of 36.8%, on average.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Deckers Outdoor Corporation (DECK): Free Stock Analysis Report Urban Outfitters, Inc. (URBN): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report The Gap, Inc. (GAP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks