In a market where value is scarce, GAP INC/THE (NYSE:GAP) offers a refreshing opportunity with its solid fundamentals.

Consider GAP INC/THE (NYSE:GAP) as a top value stock, identified by our stock screening tool. GAP shines in terms of profitability, solvency, and liquidity, all while remaining very reasonably priced. Let's dive deeper into the analysis.

Valuation Assessment of GAP

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of GAP, the assigned 8 reflects its valuation:

• The Price/Earnings ratio is 9.32, which indicates a very decent valuation of GAP.
• GAP's Price/Earnings ratio is rather cheap when compared to the industry. GAP is cheaper than 83.47% of the companies in the same industry.
• When comparing the Price/Earnings ratio of GAP to the average of the S&P500 Index (28.90), we can say GAP is valued rather cheaply.
• GAP is valuated reasonably with a Price/Forward Earnings ratio of 9.23.
• Based on the Price/Forward Earnings ratio, GAP is valued a bit cheaper than the industry average as 77.69% of the companies are valued more expensively.
• The average S&P500 Price/Forward Earnings ratio is at 21.58. GAP is valued rather cheaply when compared to this.
• Based on the Enterprise Value to EBITDA ratio, GAP is valued cheaper than 89.26% of the companies in the same industry.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of GAP indicates a rather cheap valuation: GAP is cheaper than 88.43% of the companies listed in the same industry.
• GAP's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• A more expensive valuation may be justified as GAP's earnings are expected to grow with 19.35% in the coming years.

Exploring GAP's Profitability

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, GAP has achieved a 5:

• GAP's Return On Assets of 6.94% is fine compared to the rest of the industry. GAP outperforms 75.21% of its industry peers.
• The Return On Equity of GAP (26.25%) is better than 80.17% of its industry peers.
• Looking at the Return On Invested Capital, with a value of 11.44%, GAP is in the better half of the industry, outperforming 75.21% of the companies in the same industry.
• GAP's Profit Margin of 5.40% is fine compared to the rest of the industry. GAP outperforms 78.51% of its industry peers.
• GAP's Operating Margin of 7.10% is fine compared to the rest of the industry. GAP outperforms 74.38% of its industry peers.
• GAP's Gross Margin of 41.27% is fine compared to the rest of the industry. GAP outperforms 63.64% of its industry peers.

Health Analysis for GAP

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. GAP has achieved a 6 out of 10:

• The Altman-Z score of GAP (2.65) is better than 61.16% of its industry peers.
• The Debt to FCF ratio of GAP is 1.34, which is an excellent value as it means it would take GAP, only 1.34 years of fcf income to pay off all of its debts.
• GAP has a Debt to FCF ratio of 1.34. This is in the better half of the industry: GAP outperforms 76.86% of its industry peers.
• GAP has a Debt/Equity ratio of 0.47. This is a healthy value indicating a solid balance between debt and equity.
• With a decent Current ratio value of 1.54, GAP is doing good in the industry, outperforming 61.98% of the companies in the same industry.
• Looking at the Quick ratio, with a value of 0.84, GAP is in the better half of the industry, outperforming 69.42% of the companies in the same industry.

Evaluating Growth: GAP

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. GAP scores a 4 out of 10:

• The Earnings Per Share has grown by an impressive 1036.84% over the past year.
• The Earnings Per Share is expected to grow by 15.10% on average over the next years. This is quite good.
• When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
• The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

For an up to date full fundamental analysis you can check the fundamental report of GAP

Disclaimer

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.