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Gap Inc GPS

Morningstar Rating
$26.45 −0.37 (1.38%)
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Company Report

Gap Earnings: Good Feelings Abound as Dickson’s Plans Bring Quick Results; Shares Fairly Valued

No-moat Gap’s shares soared 23% in May 30 postmarket trading as first-quarter sales and profitability surpassed expectations despite uneven consumer demand for apparel. Although CEO Richard Dickson has a lot of work to do to generate consistent sales growth at each of Gap’s four brands while operating more efficiently, his personnel, product, and operating changes have already reinvigorated a company that had been floundering for years. We expect to lift our $24 fair value estimate on Gap’s shares by a high-single-digit percentage, but they are fully valued after the move.

Price vs Fair Value

GPS is trading at a 474% premium.
Price
$26.82
Fair Value
$69.00
Uncertainty
Very High
1-Star Price
$39.00
5-Star Price
$77.00
Economic Moat
Qsph
Capital Allocation
Jbpyvcsrc

Bulls Say, Bears Say

Bulls

According to Euromonitor, Old Navy was the second-largest apparel brand (after Nike) in the US in 2023. It competes in the discount apparel sector, which has been healthier than other areas of apparel retail.

Bears

Athleta has gone from being a bright spot to a source of concern as its recent results have badly trailed those of Lululemon and some other peer brands.

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News

Trading Information

Previous Close Price
$26.82
Day Range
$26.2827.24
52-Week Range
$8.5130.75
Bid/Ask
$26.33 / $26.44
Market Cap
$9.92 Bil
Volume/Avg
9.4 Mil / 9.2 Mil

Key Statistics

Price/Earnings (Normalized)
14.45
Price/Sales
0.67
Dividend Yield (Trailing)
2.27%
Dividend Yield (Forward)
2.27%
Total Yield
2.24%

Company Profile

Gap retails apparel, accessories, and personal-care products under the Gap, Old Navy, Banana Republic, and Athleta brands. Old Navy generates more than half of Gap’s sales. The firm also operates e-commerce sites, outlet stores, and specialty stores under various Gap names. Gap operates approximately 2,600 stores in North America, Europe, and Asia and franchises about 1,000 more in Asia, Europe, Latin America, and other regions. Gap was founded in 1969 and is based in San Francisco.
Sector
Consumer Cyclical
Industry
Apparel Retail
Stock Style Box
Mid Core
Total Number of Employees
85,000

Competitors

Valuation

Metric
GPS
ROST
TJX
Price/Earnings (Normalized)
14.4524.3426.57
Price/Book Value
3.659.7816.16
Price/Sales
0.672.342.25
Price/Cash Flow
8.2919.0021.37
Price/Earnings
GPS
ROST
TJX

Financial Strength

Metric
GPS
ROST
TJX
Quick Ratio
0.621.200.59
Current Ratio
1.501.771.21
Interest Coverage
8.8131.1573.38
Quick Ratio
GPS
ROST
TJX

Profitability

Metric
GPS
ROST
TJX
Return on Assets (Normalized)
6.85%14.26%15.88%
Return on Equity (Normalized)
30.74%44.10%69.19%
Return on Invested Capital (Normalized)
9.22%18.15%23.32%
Return on Assets
GPS
ROST
TJX
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Apparel Retail Industry Comparables

1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
Industria De Diseno Textil SA ADR
IDEXY
Wnk$152.4 Bil
Industria De Diseno Textil SA Share From Split
IDEXF
Spcy$152.4 Bil
TJX Companies Inc
TJX
XygpljrfxPgxkm$121.3 Bil
Fast Retailing Co Ltd ADR
FRCOY
Bfvfq$81.4 Bil
Fast Retailing Co Ltd
FRCOF
Qrk$81.4 Bil
Ross Stores Inc
ROST
DysrxgftnDjk$48.5 Bil
Lululemon Athletica Inc
LULU
YwyfhqvbqJkggk$39.8 Bil
Next PLC
NXGPF
Grqgrdx$14.9 Bil
Urban Outfitters Inc
URBN
JbwtwnjFxlkk$4.0 Bil

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