After years of being out of fashion, a bit of reinvention went a long way in 2012 for the Gap, its management and its investors: Shares of the retailer soared. It raised its dividend and set plans to repurchase shares. Revenue is on track to grow sequentially for only the second time in six years, and earnings are expected to climb sharply.
When you think “Gap” and “Company of the Year,” you might be scratching your head. But remember, and this is key, this pick was about 2012, not the last five years, not the next five. And it’s been a very good, and memorable, year for the San Francisco-based clothing shop.
With a 71% stock-price increase since the start of the year (through Dec. 11), Gap placed in the top 4% of the S&P 1500. Meanwhile, it rewarded stockholders by boosting its dividend more than 10% to 50 cents annually and announced it would reduce the number of shares on the market with a $1 billion buyback.
Gap gave upbeat forecasts for the first three quarters of year, each time predicting profit beats, and overall 2012 earnings growth is expected to rise 33.5% from last year. Analysts project revenue will be up 7% for the year, which is quite an accomplishment: Gap’s sales have been down four of the last five years. Additionally, it’s on pace for four straight quarters of same-store sales growth.
Also on the plus side, Gap’s not burdened with excessive debt, its multiple is very reasonable among its peer group, and net margins are forecast by Wall Street to come in at a solid 7.2% for the year.
source : yahoo