GAP INC/THE (GAP) Stock Fundamental Analysis
NYSE:GAP - New York Stock Exchange, Inc. - US3647601083 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to GAP. GAP was compared to 123 industry peers in the Specialty Retail industry. While GAP belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. A decent growth rate in combination with a cheap valuation! Better keep an eye on GAP.
1. Profitability
1.1 Basic Checks
In the past year GAP was profitable.
In the past year GAP had a positive cash flow from operations.
In multiple years GAP reported negative net income over the last 5 years.
In the past 5 years GAP always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 7.60%, GAP is in the better half of the industry, outperforming 79.67% of the companies in the same industry.
The Return On Equity of GAP (26.47%) is better than 84.55% of its industry peers.
With a decent Return On Invested Capital value of 11.03%, GAP is doing good in the industry, outperforming 78.86% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.6% | ||
| ROE | 26.47% | ||
| ROIC | 11.03% |
ROA(3y)3.29%
ROA(5y)1.41%
ROE(3y)12.05%
ROE(5y)4.02%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
GAP has a better Profit Margin (5.80%) than 81.30% of its industry peers.
GAP's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 7.70%, GAP is in the better half of the industry, outperforming 78.86% of the companies in the same industry.
GAP's Operating Margin has improved in the last couple of years.
The Gross Margin of GAP (41.41%) is better than 64.23% of its industry peers.
In the last couple of years the Gross Margin of GAP has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 7.7% | ||
| PM (TTM) | 5.8% | ||
| GM | 41.41% |
OM growth 3Y11.89%
OM growth 5Y5.36%
PM growth 3Y53.87%
PM growth 5Y21.16%
GM growth 3Y1.21%
GM growth 5Y1.97%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), GAP is creating some value.
GAP has more shares outstanding than it did 1 year ago.
The number of shares outstanding for GAP has been increased compared to 5 years ago.
GAP has a better debt/assets ratio than last year.
2.2 Solvency
GAP has a debt to FCF ratio of 1.70. This is a very positive value and a sign of high solvency as it would only need 1.70 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.70, GAP is in the better half of the industry, outperforming 78.86% of the companies in the same industry.
GAP has a Debt/Equity ratio of 0.45. This is a healthy value indicating a solid balance between debt and equity.
GAP has a Debt to Equity ratio (0.45) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 1.7 | ||
| Altman-Z | N/A |
ROIC/WACC1.3
WACC8.46%
2.3 Liquidity
A Current Ratio of 1.71 indicates that GAP should not have too much problems paying its short term obligations.
With a decent Current ratio value of 1.71, GAP is doing good in the industry, outperforming 74.80% of the companies in the same industry.
A Quick Ratio of 0.98 indicates that GAP may have some problems paying its short term obligations.
GAP has a Quick ratio of 0.98. This is in the better half of the industry: GAP outperforms 78.05% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.71 | ||
| Quick Ratio | 0.98 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 26.23% over the past year.
The Earnings Per Share has been growing slightly by 2.22% on average over the past years.
Looking at the last year, GAP shows a small growth in Revenue. The Revenue has grown by 1.07% in the last year.
GAP shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -1.64% yearly.
EPS 1Y (TTM)26.23%
EPS 3Y15.62%
EPS 5Y2.22%
EPS Q2Q%24.39%
Revenue 1Y (TTM)1.07%
Revenue growth 3Y-3.27%
Revenue growth 5Y-1.64%
Sales Q2Q%2.21%
3.2 Future
GAP is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 5.43% yearly.
Based on estimates for the next years, GAP will show a small growth in Revenue. The Revenue will grow by 1.91% on average per year.
EPS Next Y0.69%
EPS Next 2Y3.77%
EPS Next 3Y5.35%
EPS Next 5Y5.43%
Revenue Next Year2.09%
Revenue Next 2Y2.03%
Revenue Next 3Y1.97%
Revenue Next 5Y1.91%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 8.16 indicates a reasonable valuation of GAP.
GAP's Price/Earnings ratio is rather cheap when compared to the industry. GAP is cheaper than 90.24% of the companies in the same industry.
GAP's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 26.82.
GAP is valuated cheaply with a Price/Forward Earnings ratio of 7.92.
Based on the Price/Forward Earnings ratio, GAP is valued cheaper than 88.62% of the companies in the same industry.
GAP is valuated cheaply when we compare the Price/Forward Earnings ratio to 36.21, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.16 | ||
| Fwd PE | 7.92 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, GAP is valued cheaper than 91.87% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, GAP is valued cheaply inside the industry as 86.18% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 8 | ||
| EV/EBITDA | 3.64 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates GAP does not grow enough to justify the current Price/Earnings ratio.
GAP has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)11.79
PEG (5Y)3.67
EPS Next 2Y3.77%
EPS Next 3Y5.35%
5. Dividend
5.1 Amount
GAP has a Yearly Dividend Yield of 3.39%.
Compared to an average industry Dividend Yield of 5.04, GAP pays a better dividend. On top of this GAP pays more dividend than 89.43% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.39, GAP pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.39% |
5.2 History
The dividend of GAP decreases each year by -9.10%.
GAP has paid a dividend for at least 10 years, which is a reliable track record.
GAP has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)-9.1%
Div Incr Years0
Div Non Decr Years4
5.3 Sustainability
GAP pays out 26.17% of its income as dividend. This is a sustainable payout ratio.
DP26.17%
EPS Next 2Y3.77%
EPS Next 3Y5.35%
18.84
-0.62 (-3.19%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Discretionary Distribution & Retail
GICS IndustrySpecialty Retail
Earnings (Last)
Earnings (Next)
Inst Owners64.38%
Inst Owner ChangeN/A
Ins Owners39.16%
Ins Owner Change40.09%
Market Cap7.03B
Analysts72.5
Price Target26.92 (42.89%)
Short Float %8.73%
Short Ratio1.79
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.39% |
Yearly Dividend0.6
Dividend Growth(5Y)-9.1%
DP26.17%
Div Incr Years0
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)27.94%
Min EPS beat(2)11.43%
Max EPS beat(2)44.45%
EPS beat(4)4
Avg EPS beat(4)28.02%
Min EPS beat(4)11.43%
Max EPS beat(4)44.45%
EPS beat(8)8
Avg EPS beat(8)109.32%
EPS beat(12)11
Avg EPS beat(12)10218.5%
EPS beat(16)13
Avg EPS beat(16)7654.76%
Revenue beat(2)2
Avg Revenue beat(2)0.54%
Min Revenue beat(2)0.23%
Max Revenue beat(2)0.85%
Revenue beat(4)3
Avg Revenue beat(4)0.5%
Min Revenue beat(4)-0.55%
Max Revenue beat(4)1.47%
Revenue beat(8)6
Avg Revenue beat(8)0.86%
Revenue beat(12)7
Avg Revenue beat(12)0.59%
Revenue beat(16)8
Avg Revenue beat(16)-0.29%
PT rev (1m)0.24%
PT rev (3m)0.48%
EPS NQ rev (1m)-0.07%
EPS NQ rev (3m)-1.93%
EPS NY rev (1m)0.12%
EPS NY rev (3m)-3.34%
Revenue NQ rev (1m)-0.03%
Revenue NQ rev (3m)0.19%
Revenue NY rev (1m)0.05%
Revenue NY rev (3m)0.58%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.16 | ||
| Fwd PE | 7.92 | ||
| P/S | 0.46 | ||
| P/FCF | 8 | ||
| P/OCF | 5.34 | ||
| P/B | 2.12 | ||
| P/tB | 2.12 | ||
| EV/EBITDA | 3.64 |
EPS(TTM)2.31
EY12.26%
EPS(NY)2.38
Fwd EY12.63%
FCF(TTM)2.36
FCFY12.51%
OCF(TTM)3.53
OCFY18.72%
SpS40.64
BVpS8.9
TBVpS8.9
PEG (NY)11.79
PEG (5Y)3.67
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.6% | ||
| ROE | 26.47% | ||
| ROCE | 13.41% | ||
| ROIC | 11.03% | ||
| ROICexc | 14.8% | ||
| ROICexgc | 14.8% | ||
| OM | 7.7% | ||
| PM (TTM) | 5.8% | ||
| GM | 41.41% | ||
| FCFM | 5.8% |
ROA(3y)3.29%
ROA(5y)1.41%
ROE(3y)12.05%
ROE(5y)4.02%
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3Y18.13%
ROICexcg growth 5Y12.19%
ROICexc growth 3Y17.89%
ROICexc growth 5Y11.77%
OM growth 3Y11.89%
OM growth 5Y5.36%
PM growth 3Y53.87%
PM growth 5Y21.16%
GM growth 3Y1.21%
GM growth 5Y1.97%
F-Score8
Asset Turnover1.31
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 1.7 | ||
| Debt/EBITDA | 0.89 | ||
| Cap/Depr | 87.93% | ||
| Cap/Sales | 2.88% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 79.04% | ||
| Profit Quality | 100% | ||
| Current Ratio | 1.71 | ||
| Quick Ratio | 0.98 | ||
| Altman-Z | N/A |
F-Score8
WACC8.46%
ROIC/WACC1.3
Cap/Depr(3y)98.9%
Cap/Depr(5y)102.35%
Cap/Sales(3y)3.39%
Cap/Sales(5y)3.43%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)26.23%
EPS 3Y15.62%
EPS 5Y2.22%
EPS Q2Q%24.39%
EPS Next Y0.69%
EPS Next 2Y3.77%
EPS Next 3Y5.35%
EPS Next 5Y5.43%
Revenue 1Y (TTM)1.07%
Revenue growth 3Y-3.27%
Revenue growth 5Y-1.64%
Sales Q2Q%2.21%
Revenue Next Year2.09%
Revenue Next 2Y2.03%
Revenue Next 3Y1.97%
Revenue Next 5Y1.91%
EBIT growth 1Y39.55%
EBIT growth 3Y8.23%
EBIT growth 5Y3.64%
EBIT Next Year60.17%
EBIT Next 3Y19.56%
EBIT Next 5Y10.59%
FCF growth 1Y114.39%
FCF growth 3Y108.28%
FCF growth 5Y23.2%
OCF growth 1Y33.74%
OCF growth 3Y22.47%
OCF growth 5Y1.04%