GAP (NYSE:GAP) Shares Gap Down on Disappointing Earnings

The Gap, Inc. (NYSE:GAP)’s share price gapped down prior to trading on Friday following a dissappointing earnings announcement. The stock had previously closed at $25.00, but opened at $21.35. GAP shares last traded at $20.7850, with a volume of 7,583,467 shares trading hands.

The company reported $0.38 EPS for the quarter, missing analysts’ consensus estimates of $0.39 by ($0.01). GAP had a return on equity of 22.98% and a net margin of 5.31%.The business had revenue of $3.50 billion during the quarter, compared to analysts’ expectations of $3.52 billion. During the same period in the previous year, the business earned $0.51 earnings per share. The business’s quarterly revenue was up 1.0% on a year-over-year basis. GAP has set its FY 2026 guidance at 2.300-2.400 EPS.

GAP Dividend Announcement

The business also recently declared a quarterly dividend, which will be paid on Wednesday, July 29th. Investors of record on Wednesday, July 8th will be given a $0.175 dividend. The ex-dividend date is Wednesday, July 8th. This represents a $0.70 annualized dividend and a yield of 3.3%. GAP’s dividend payout ratio (DPR) is currently 32.56%.

Key Stories Impacting GAP

Here are the key news stories impacting GAP this week:

• Positive Sentiment: Gap reported positive comparable sales for the ninth straight quarter, with net sales up 1% and gross margin of 40.5% topping expectations. The company also raised its full-year EPS outlook, and Goldman Sachs and BTIG both reiterated buy ratings with a $28 price target, suggesting analysts still see upside from current levels. Gap Inc. Reports First Quarter Fiscal 2026 Results, Raises Full Year Earnings Per Share Outlook
• Neutral Sentiment: The company posted adjusted-looking mixed quarter details, with EPS of $0.38 versus $0.39 expected and revenue of $3.50 billion versus $3.52 billion expected, indicating the results were close to forecasts but not strong enough to offset concerns about guidance. Gap Quarterly Earnings Report
• Negative Sentiment: Management lowered full-year sales guidance, citing weaker-than-expected performance at Old Navy and a cautious consumer backdrop. Reuters also noted apparel stocks fell on signs that discretionary spending remains constrained, which is weighing on sentiment around GAP. Reuters: Gap, American Eagle fall as weak apparel demand signals constrained consumer spending

Analyst Ratings Changes

A number of equities research analysts have issued reports on the company. TD Cowen decreased their price objective on GAP from $32.00 to $26.00 and set a “buy” rating on the stock in a research report on Monday, May 18th. Evercore set a $20.00 target price on GAP and gave the stock an “in-line” rating in a report on Friday. Zacks Research downgraded GAP from a “strong-buy” rating to a “hold” rating in a research report on Monday, February 2nd. Wall Street Zen lowered GAP from a “buy” rating to a “hold” rating in a report on Saturday, March 7th. Finally, BTIG Research restated a “buy” rating and issued a $28.00 price target on shares of GAP in a research report on Friday. Two investment analysts have rated the stock with a Strong Buy rating, ten have issued a Buy rating and six have assigned a Hold rating to the company. Based on data from MarketBeat, the stock currently has a consensus rating of “Moderate Buy” and an average price target of $28.64.

Insider Buying and Selling

In other GAP news, CEO Horacio Barbeito sold 113,684 shares of the company’s stock in a transaction on Friday, March 20th. The stock was sold at an average price of $24.01, for a total value of $2,729,552.84. Following the completion of the sale, the chief executive officer directly owned 115,024 shares in the company, valued at approximately $2,761,726.24. This represents a 49.71% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, major shareholder John J. Fisher sold 300,000 shares of the stock in a transaction on Wednesday, April 8th. The stock was sold at an average price of $25.40, for a total value of $7,620,000.00. Following the transaction, the insider directly owned 446,781 shares in the company, valued at $11,348,237.40. The trade was a 40.17% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Insiders have sold 923,098 shares of company stock valued at $22,648,158 over the last 90 days. 31.00% of the stock is owned by insiders.

Institutional Trading of GAP

Hedge funds have recently added to or reduced their stakes in the business. Cullen Frost Bankers Inc. bought a new position in GAP during the 4th quarter worth about $26,000. Plato Investment Management Ltd bought a new stake in shares of GAP in the 4th quarter valued at about $28,000. V Square Quantitative Management LLC bought a new stake in shares of GAP in the 4th quarter valued at about $31,000. Cornerstone Planning Group LLC purchased a new stake in shares of GAP in the 3rd quarter worth approximately $35,000. Finally, EverSource Wealth Advisors LLC lifted its position in shares of GAP by 177.0% in the 2nd quarter. EverSource Wealth Advisors LLC now owns 7,016 shares of the company’s stock worth $153,000 after purchasing an additional 4,483 shares during the period. 58.81% of the stock is owned by hedge funds and other institutional investors.

GAP Trading Down 16.3%

The company has a quick ratio of 1.08, a current ratio of 1.75 and a debt-to-equity ratio of 0.39. The stock’s 50 day moving average price is $24.26 and its 200-day moving average price is $25.69. The stock has a market capitalization of $7.65 billion, a P/E ratio of 9.72, a P/E/G ratio of 1.39 and a beta of 2.11.

GAP Company Profile

Gap Inc is a global specialty retailer renowned for its portfolio of apparel and accessories brands, including Gap, Banana Republic, Old Navy and Athleta. The company designs, sources and markets clothing across a broad price range and style spectrum, catering to men, women and children. Its offerings extend from everyday wardrobe essentials such as denim, tees and outerwear to performance and lifestyle pieces, reflecting each brand’s distinct identity and price point.

Founded in San Francisco in 1969 by Donald and Doris Fisher, Gap Inc has grown into one of the world’s largest apparel companies.