Gap Inc. (GPS, $29.51) to separate Old Navy as a new company
Gap Inc’s shares rose 25% on Thursday after the company indicated its plans to separate its Old Navy brand, along with the closing of 230 Gap stores. 68 stores have already been shut.
The company has had mixed sales across its brands. Old Navy performed the best, as its wide range of budget apparel made it more attractive to a broader base of customers. On the other hand, Gap had a hard time catching up with the fast-fashion retailers and changing trends. This is confirmed by the fact that Old Navy has annual sales of about $8 billion, while the other brands have a combined revenue of $9 billion.
The company is also planning to boost its marketing and to develop new products for the Gap brand. However, the CEO Art Peck wants to focus more on the period-over-period improvement. Gap shares have fallen roughly 20% over the past 12 months, bringing its market cap to about $9.7 billion.
It is still undecided under which company name Gap, Athleta, Banana Republic and the remaining brands will come. The separation of Old Navy into a publicly listed company, which Gap said will be tax free to investors, is likely to be completed by 2020.
Analysts believe that the separation of Old Navy as a new company may enable a strategic focus, but this could reduce the diversification the brand provides to the overall entity.
GAP in upward trend: 10-day moving average moved above 50-day moving average on January 23, 2025
The 10-day moving average for GAP crossed bullishly above the 50-day moving average on January 23, 2025. This indicates that the trend has shifted higher and could be considered a buy signal. In of 14 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
Bearish Trend Analysis
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In of 51 cases where GAP's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are .
The Momentum Indicator moved below the 0 level on February 03, 2025. You may want to consider selling the stock, shorting the stock, or exploring put options on GAP as a result. In of 79 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for GAP turned negative on February 03, 2025. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 53 similar instances when the indicator turned negative. In of the 53 cases the stock turned lower in the days that followed. This puts the odds of success at .
GAP moved below its 50-day moving average on February 03, 2025 date and that indicates a change from an upward trend to a downward trend.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where GAP declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
GAP broke above its upper Bollinger Band on January 21, 2025. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Aroon Indicator for GAP entered a downward trend on January 28, 2025. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (3.922) is normal, around the industry mean (3.964). P/E Ratio (20.336) is within average values for comparable stocks, (110.742). Projected Growth (PEG Ratio) (1.003) is also within normal values, averaging (1.444). Dividend Yield (0.022) settles around the average of (0.028) among similar stocks. P/S Ratio (0.688) is also within normal values, averaging (1.139).
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. GAP’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. GAP’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 76, placing this stock worse than average.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
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General Information
an operator of stores that retail clothing, accessories and personal care products
Industry ApparelFootwearRetail