The Gap Inc. (GPS): One Fashion Retailer Bucking the Trend

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Valuations and Metrics

The Gap isn’t only the best performing of the stocks mentioned here, but it is also the cheapest looking at the P/E ratio. The stock currently trades at 15.78 times trailing earnings, versus Abercrombie & Fitch Co. (NYSE:ANF)’s 16.16 and American Eagle Outfitters (NYSE:AEO)’s 17.82. Moreover, the company’s operating margin of around 13% is slightly ahead of the competition, while the return on equity of 40% is excellent. Moreover, the balance sheet is strong, with around $1.61 billion in cash and some $1.25 billion in debt for a total debt to equity ratio of 39.45.

The Bottom Line

Several US fashion retailers have come out with disappointing first-quarter results recently, painting a less than encouraging image of the industry’s prospects. Yet, things aren’t all bad. The Gap Inc. (NYSE:GPS) actually delivered some fairly strong results for the quarter, with earnings, comp store sales, and revenue on the rise. Additionally, the stock is trading at a discount to some of its major competitors.

Daniel James has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article One Fashion Retailer Bucking the Trend originally appeared on Fool.com.

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