Exploring Strategic Opportunities: NIO Limited (NIO), The Gap Inc. (GPS)

NIO Limited (NYSE: NIO) shares are 408.46% up in the year-to-date (YTD) period and have moved 14.57% or $2.6 higher in the latest trading session. However, stock’s trailing 12-month performance remains nearly +868.72% lower. Comparatively, the stock is -2.53% down YTD and 433.68% over the trailing 3-month period. If we look at the shorter duration, its week performance is 45.38% and 66.59% over the month.

Analyst Recommendations

On August 25, 2020, UBS recommended the NIO stock is a Neutral, while earlier, Morgan Stanley had Upgrade the stock as a Overweight on August 26, 2020. 15 analysts offering the recommendations for the stock have a consensus rating of 2.80 to suggest that the NIO stock is a “Moderate Buy. 2 of the 15 analysts rate the stock as a “Sell”, while 0 has rated it as “Underweight”. 6 recommend buying, with 1 rating it as an Overweight.

The stock currently trades at $20.44 and analysts tracking its performance over the next 12 months have a consensus estimate price target of $11.01. The forecasts give the NIO Limited stock a price target range of $159.01 on the higher side while at least one analyst think the stock could plunge to a low of $30.07. The two limits represent an upside potential of 87.15% or 32.03%.

Earnings Forecast

Analysts estimate the earnings to increase 40.70% in the current quarter to -$0.17, up from the -$2.38 reported in the same quarter a year ago. For the current year, earnings should grow to an average of -$0.71, up 89.30% from -$1.5 reported last year. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between -$0.22 and -$0.06. Wall Street estimates earnings per share to be at an average of -$0.49 for the next year.

The Gap Inc. (NYSE:GPS), on the other hand, is trading around $17.03 with a market cap of $6.43B and analyst research firms have a negative stance on its shares. Analysts predict that the stock will reach $11.11 and spell out a less modest performance – a -53.29% return. Some analysts are even forecasting $Industrials per share in earnings this year on a short term (1 year) basis.

Let us briefly look at the The Gap Inc. (GPS) financials, with a focus on its operating details as indicated in its earnings report for the last quarter.

Company balance sheet and cash flow

GPS’s operating margin was negative on the trailing 12 months basis, remaining steady at -6.70%, while the operating expenses over the recent quarter were at $1.51 billion. This represented a 28.24% of the company’s total revenues which amounted $2.11 billion. With this in place, we can see that the company’s diluted EPS declined -$2.51 on the year-over-year period, growing to $0.60 as given in the last earnings report.

In terms of the balance sheet & cash flow as of Name, the total assets figure advanced to $12.71 billion from $13.68 billion over the previous quarter. Short term investments amounted to $51.0 million while total current assets were at $4.22 billion. The cash flow from operating activities totaled -$940.0 million, significantly lower than the $29.0 million reported in the year-ago quarter. The company’s free cash flow for the quarter was -$1.06 billion.

Insider activity

Insiders have transacted a total of 48 times at The Gap Inc. over the last 6 months, with insider purchases undertaken 32 times and accounting for 11,116,507 shares. Insider sales totaled 116,041 shares over the same period, with these deals completed in 16 transactions. Looking at these numbers, we realize that net purchases over that period are 16.0 shares. Insiders now hold a total of Great Panther Mining Limited shares after the latest sales, with General Mills, Inc. net shares purchased.

Major holders

Insiders own 9.00% of the company shares, while shares held by institutions stand at 60.10% with a share float percentage of 207.92M.