Gap (GPS) beat analyst expectations on both revenue and profit in its latest fourth quarter results. David Swartz, Equity Analyst at Morningstar, joins Yahoo Finance Live to discuss the company's performance and the wider retail landscape. Swartz notes that "most of the benefit" from Gap's earnings report stemmed from "greater-than-expected" gross margins. However, Swartz believes Gap's stock is "undervalued," adding that he plans to revise his rating upwards as the company proves itself to be "stable" despite headwinds. Amid sales numbers that are "still not strong," Swartz suggests that the new CEO, Richard Dixon, provides hope for a turnaround and improved margins. He warns that Dixon "has his work cut out for him." Swartz stresses that the company's focus needs to be on Old Navy, as the brand "generates the vast majority of its operating income." For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live. Editor's note: This article was written by Angel Smith

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