The Gap Inc. (GPS): Why Should You Bet on this Outperforming Retailer?

Express, Inc. (NYSE:EXPR) believes in offering value to its customers, but it has now focused on a simple message of lower price points. Its increased promotions will create pressure on margin levels. It has used its online platform effectively to drive its sales growth, with 48% growth last quarter. Its Canada expansion has performed well with new logistics partner and it will look for more international stores growth this year. It will also come up with outlet stores strategy with slightly different price points.

Source: Google Finance and Yahoo Finance

The Gap Inc. (NYSE:GPS) has reported the highest operating margin of 14.21% among the three mentioned peers with a 1 year forward P/E of 14.84. Urban Outfitters, Inc. (NASDAQ:URBN) has the highest P/S ratio of 2.39, but the lowest operating margin of 11.26%. Express, Inc. (NYSE:EXPR)has an operating margin of 11.54% and the lowest forward P/E of 12.77.

Conclusion

The Gap Inc. (NYSE:GPS) has a strong growth opportunity with international expansion plans in emerging markets of China and Japan. Its direct-to-customers channel will drive its comps growth with omni-channels initiatives. It has taken crucial steps of store closures and new brands expansion to increase its productivity levels in North America. Its overall perspective looks better for growth in the long term, which is why I recommend a “buy.”

The article Why Should You Bet on this Outperforming Retailer? originally appeared on Fool.com and is written by Ash Sharma.

Ash Sharma has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Ash is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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