GAP INC/THE (GPS)

US3647601083 - Common Stock

27.55  +0.26 (+0.95%)

After market: 27.46 -0.09 (-0.33%)

Fundamental Rating

4

Overall GPS gets a fundamental rating of 4 out of 10. We evaluated GPS against 126 industry peers in the Specialty Retail industry. GPS has an average financial health and profitability rating. GPS is not valued too expensively and it also shows a decent growth rate.



4

1. Profitability

1.1 Basic Checks

GPS had positive earnings in the past year.
In the past year GPS had a positive cash flow from operations.
The reported net income has been mixed in the past 5 years: GPS reported negative net income in multiple years.
GPS had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

GPS has a better Return On Assets (4.55%) than 65.08% of its industry peers.
GPS's Return On Equity of 19.34% is fine compared to the rest of the industry. GPS outperforms 76.19% of its industry peers.
With a decent Return On Invested Capital value of 7.22%, GPS is doing good in the industry, outperforming 62.70% of the companies in the same industry.
Industry RankSector Rank
ROA 4.55%
ROE 19.34%
ROIC 7.22%
ROA(3y)1.59%
ROA(5y)0.5%
ROE(3y)6.57%
ROE(5y)0.97%
ROIC(3y)N/A
ROIC(5y)N/A

1.3 Margins

GPS's Profit Margin of 3.37% is fine compared to the rest of the industry. GPS outperforms 68.25% of its industry peers.
In the last couple of years the Profit Margin of GPS has declined.
GPS has a Operating Margin (4.27%) which is comparable to the rest of the industry.
In the last couple of years the Operating Margin of GPS has declined.
Looking at the Gross Margin, with a value of 38.81%, GPS is in line with its industry, outperforming 57.14% of the companies in the same industry.
GPS's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 4.27%
PM (TTM) 3.37%
GM 38.81%
OM growth 3YN/A
OM growth 5Y-15.04%
PM growth 3YN/A
PM growth 5Y-11.03%
GM growth 3Y4.39%
GM growth 5Y0.34%

4

2. Health

2.1 Basic Checks

GPS has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
GPS has more shares outstanding than it did 1 year ago.
The number of shares outstanding for GPS has been reduced compared to 5 years ago.
GPS has a better debt/assets ratio than last year.

2.2 Solvency

The Debt to FCF ratio of GPS is 1.34, which is an excellent value as it means it would take GPS, only 1.34 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of GPS (1.34) is better than 78.57% of its industry peers.
A Debt/Equity ratio of 0.57 indicates that GPS is somewhat dependend on debt financing.
GPS's Debt to Equity ratio of 0.57 is in line compared to the rest of the industry. GPS outperforms 49.21% of its industry peers.
Even though the debt/equity ratio score it not favorable for GPS, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
Industry RankSector Rank
Debt/Equity 0.57
Debt/FCF 1.34
Altman-Z N/A
ROIC/WACC0.85
WACC8.48%

2.3 Liquidity

GPS has a Current Ratio of 1.42. This is a normal value and indicates that GPS is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of GPS (1.42) is comparable to the rest of the industry.
A Quick Ratio of 0.78 indicates that GPS may have some problems paying its short term obligations.
GPS has a Quick ratio (0.78) which is in line with its industry peers.
Industry RankSector Rank
Current Ratio 1.42
Quick Ratio 0.78

4

3. Growth

3.1 Past

GPS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 326.98%, which is quite impressive.
Measured over the past years, GPS shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -11.20% on average per year.
Looking at the last year, GPS shows a decrease in Revenue. The Revenue has decreased by -4.66% in the last year.
GPS shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -2.13% yearly.
EPS 1Y (TTM)326.98%
EPS 3YN/A
EPS 5Y-11.2%
EPS growth Q2Q165.33%
Revenue 1Y (TTM)-4.66%
Revenue growth 3Y2.56%
Revenue growth 5Y-2.13%
Revenue growth Q2Q1.3%

3.2 Future

GPS is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 13.18% yearly.
The Revenue is expected to grow by 1.03% on average over the next years.
EPS Next Y-11.83%
EPS Next 2Y2.47%
EPS Next 3Y12.02%
EPS Next 5Y13.18%
Revenue Next Year0.48%
Revenue Next 2Y0.95%
Revenue Next 3Y0.29%
Revenue Next 5Y1.03%

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

4. Valuation

4.1 Price/Earnings Ratio

GPS is valuated rather expensively with a Price/Earnings ratio of 19.27.
69.84% of the companies in the same industry are more expensive than GPS, based on the Price/Earnings ratio.
GPS's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 26.48.
A Price/Forward Earnings ratio of 21.85 indicates a rather expensive valuation of GPS.
Based on the Price/Forward Earnings ratio, GPS is valued a bit cheaper than 60.32% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of GPS to the average of the S&P500 Index (22.79), we can say GPS is valued inline with the index average.
Industry RankSector Rank
PE 19.27
Fwd PE 21.85

4.2 Price Multiples

GPS's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. GPS is cheaper than 65.08% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, GPS is valued cheaply inside the industry as 84.92% of the companies are valued more expensively.
Industry RankSector Rank
P/FCF 9.19
EV/EBITDA 8.49

4.3 Compensation for Growth

A more expensive valuation may be justified as GPS's earnings are expected to grow with 12.02% in the coming years.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y2.47%
EPS Next 3Y12.02%

5

5. Dividend

5.1 Amount

GPS has a Yearly Dividend Yield of 2.11%.
Compared to an average industry Dividend Yield of 3.22, GPS pays a better dividend. On top of this GPS pays more dividend than 87.30% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.34, GPS has a dividend comparable with the average S&P500 company.
Industry RankSector Rank
Dividend Yield 2.11%

5.2 History

The dividend of GPS decreases each year by -9.13%.
GPS has been paying a dividend for at least 10 years, so it has a reliable track record.
GPS has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)-9.13%
Div Incr Years3
Div Non Decr Years3

5.3 Sustainability

GPS pays out 44.22% of its income as dividend. This is a bit on the high side, but may be sustainable.
DP44.22%
EPS Next 2Y2.47%
EPS Next 3Y12.02%

GAP INC/THE

NYSE:GPS (3/28/2024, 8:14:03 PM)

After market: 27.46 -0.09 (-0.33%)

27.55

+0.26 (+0.95%)

Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Discretionary Distribution & Retail
GICS IndustrySpecialty Retail
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap10.22B
Analysts
Price Target
Dividend
Industry RankSector Rank
Dividend Yield 2.11%
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
Industry RankSector Rank
PE 19.27
Fwd PE 21.85
P/S
P/FCF
P/OCF
P/B
P/tB
EV/EBITDA
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)N/A
PEG (5Y)N/A
Profitability
Industry RankSector Rank
ROA 4.55%
ROE 19.34%
ROCE
ROIC
ROICexc
ROICexgc
OM 4.27%
PM (TTM) 3.37%
GM 38.81%
FCFM
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover1.35
Health
Industry RankSector Rank
Debt/Equity 0.57
Debt/FCF
Debt/EBITDA
Cap/Depr
Cap/Sales
Interest Coverage
Cash Conversion
Profit Quality
Current Ratio 1.42
Quick Ratio 0.78
Altman-Z
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)326.98%
EPS 3YN/A
EPS 5Y
EPS growth Q2Q
EPS Next Y-11.83%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)-4.66%
Revenue growth 3Y2.56%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y