Gap Inc. stock (NYSE: GAP) is scheduled to release its fiscal first-quarter earnings on Thursday, May 29, 2025, with analysts projecting earnings of 45 cents per share on $3.42 billion in revenue. This would represent a 7% year-over-year increase in earnings and a 1% growth in sales compared to the prior year’s figures of 42 cents per share and $3.39 billion in revenue. Historically, GAP stock has increased 74% of the time following earnings announcements, with a median one-day rise of 7.6% and a maximum observed increase of 31%.
For fiscal year 2025, Gap projects a sales increase of 1% to 2%, while expecting a more substantial growth in operating income of approximately 8% to 10%, driven by strategic investments in brand development and supply chain improvements. Investors are advised to closely monitor the company’s initiatives to revitalize the Athleta brand, as well as its continued refinement of both digital and physical retail strategies. Gap’s focus on operational efficiency and adaptability to market conditions is expected to offer a solid foundation for navigating potential economic challenges. The company has $11 Bil in current market capitalization. Revenue over the last twelve months was $15 Bil, and it was operationally profitable with $1.1 Bil in operating profits and net income of $844 Mil.
For event-driven traders, historical patterns may offer an edge, whether by positioning ahead of earnings or reacting to post-release moves. That said, if you seek upside with lower volatility than from individual stocks, the Trefis High Quality portfolio presents an alternative, having outperformed the S&P 500 and generated returns exceeding 91% since its inception. See earnings reaction history of all stocks.
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Gap’s Historical Odds Of Positive Post-Earnings Return
Some observations on one-day (1D) post-earnings returns:
- There are 19 earnings data points recorded over the last five years, with 14 positive and 5 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 74% of the time.
- Notably, this percentage increases to 82% if we consider data for the last 3 years instead of 5.
- Median of the 14 positive returns = 7.6%, and median of the 5 negative returns = -6.1%
Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.
GAP Correlation Between 1D, 5D and 21D Historical Returns
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
