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Gap Inc GPS

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Stock XNYS Rating as of
Today’s Gainers
$28.96 +6.44 (28.60%)
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As of Delayed Price Closed
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Company Report

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

David Swartz

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.

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Price vs Fair Value

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GPS is trading at a 192% premium.
Price
$28.96
Fair Value
$41.00
Uncertainty
Very High
1-Star Price
$18.00
5-Star Price
$33.00
Economic Moat
Ccfg
Capital Allocation
Nxhrwxsf

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

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Trading Information

Previous Close Price
$22.52
Day Range
$24.92–29.08
52-Week Range
$7.79–29.08
Bid/Ask
$29.09 / $29.24
Market Cap
$10.82 Bil
Volume/Avg
53.7 Mil / 9.5 Mil

Key Statistics

Price/Earnings (Normalized)
12.31
Price/Sales
0.57
Dividend Yield (Trailing)
2.66%
Dividend Yield (Forward)
2.66%
Total Yield
2.07%

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
Small Value
Total Number of Employees
85,000
Website
https://www.gapinc.com

Competitors

Valuation

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Metric
GPS
M
URBN
Price/Earnings (Normalized)
 12.316.1412.82
Price/Book Value
 3.111.281.80
Price/Sales
 0.570.230.75
Price/Cash Flow
 7.172.905.54
Price/Earnings
GPS
M
URBN

Financial Strength

Metric
GPS
M
URBN
Quick Ratio
 0.710.250.54
Current Ratio
 1.421.381.29
Interest Coverage
 6.221.0647.72
Quick Ratio
GPS
M
URBN

Profitability

Metric
GPS
M
URBN
Return on Assets (Normalized)
 6.85%5.76%7.80%
Return on Equity (Normalized)
 30.74%23.45%15.69%
Return on Invested Capital (Normalized)
 9.22%11.22%9.67%
Return on Assets
GPS
M
URBN
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Apparel Retail Industry Comparables

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Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
CBKCQ
Christopher & Banks Corp———
IDEXY
Industria De Diseno Textil SA ADR—Jlxy$147.2 Bil
IDEXF
Industria De Diseno Textil SA Share From Split—Qxjv$146.9 Bil
TJX
TJX Companies IncPflpzxlgMbvs$116.5 Bil
FRCOY
Fast Retailing Co Ltd ADR—Jjw$78.6 Bil
FRCOF
Fast Retailing Co Ltd—Ssr$78.6 Bil
ROST
Ross Stores IncTksvjwhjtPqyj$46.9 Bil
LULU
Lululemon Athletica IncSnqnrshfLrqxc$39.3 Bil
URBN
Urban Outfitters IncMchrrvmYbvds$3.9 Bil

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