Gap Inc (GAP) AI Stock Analysis

• Market Cap: $7.53B
• Dividend Yield: 3.76%
• Average Volume (3M): 8.17M
• Price to Earnings (P/E): 8.8
• Beta (1Y): 1.21
• Revenue Growth: 1.07%
• EPS Growth: 28.03%
• Country: US
• Employees: 82,000
• Sector: Consumer Cyclical
• Sector Strength: 68
• Industry: Apparel - Retail
• EPS (TTM): 0.51
• Shares Outstanding: 373,066,500
• 10 Day Avg. Volume: 9,274,749
• 30 Day Avg. Volume: 8,169,475
• PEG Ratio: 2.19
• Price to Book (P/B): 2.34
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 8.78
• Enterprise Value/Market Cap: 1.49
• Enterprise Value/Revenue: 0.19
• Enterprise Value/Gross Profit: 1.79
• Enterprise Value/Ebitda: 1.67
• 1Y Price Target: $27.79
• Price Target Upside: 34.12% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

• Rating: 71 Outperform
• Price Target: $25.00 ▲(20.66%Upside)

Gap Inc's stock is supported by strong financial performance and a favorable valuation, making it an attractive investment. However, technical indicators suggest caution due to bearish momentum. Earnings call insights reinforce the company's strategic position, despite challenges with Athleta and potential tariffs.

Positive Factors

Brand Performance

The Gap brand and Old Navy showed strong performance with consistent market share gains, leading to a 2.2% revenue increase.

Margin Expansion

There is potential for margin expansion to return to historical levels over time.

Sales Growth

Old Navy's comparable sales exceeded market expectations, contributing significantly to sales and profitability.

Negative Factors

Cost of Goods Sold

Higher tariff burdens are anticipated to impact the cost of goods sold more than the market expected.

Earnings Impact

Management identified a net tariff headwind of $100-150M to operating income, which could impact earnings.

Tariff Impact

The stock is expected to come under pressure due to larger tariff headwinds than previously expected.

Gap Inc Business Overview & Revenue Model

Company Description

The Gap, Inc. operates as an apparel retail company. The company offers apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, and Athleta brands. Its products include denim, tees, fleece, and khakis; eyewear, jewelry, shoes, handbags, and fragrances; and fitness and lifestyle products for use in yoga, training, sports, travel, and everyday activities for women and girls. The company offers its products through company-operated stores, franchise stores, Websites, third-party arrangements, and catalogs. It has franchise agreements with unaffiliated franchisees to operate Old Navy, Gap, Athleta, and Banana Republic stores and websites in Asia, Europe, Latin America, the Middle East, and Africa. As of December 31, 2021, the company had 2,835 company-operated stores and 564 franchise stores. It also provides its products through e-commerce sites. The Gap, Inc. was incorporated in 1969 and is headquartered in San Francisco, California.

How the Company Makes Money

Gap Inc. generates revenue primarily through the sale of apparel and accessories under its various brand names. The company's revenue streams include sales from physical retail stores, which are either company-owned or franchised, and online sales through its e-commerce platforms. Gap Inc. capitalizes on its diverse brand portfolio to target different customer segments, from value-focused consumers at Old Navy to more premium offerings at Banana Republic and Athleta. Additionally, Gap Inc. benefits from strategic partnerships and collaborations with other brands and designers, which help attract new customers and drive sales. The company also invests in marketing and loyalty programs to boost customer retention and increase average transaction value, further contributing to its earnings.

Gap Inc Financial Statement Overview

Summary

Gap Inc presents a robust financial profile characterized by improved profitability, efficient operations, and solid cash management. Strong margins and returns indicate good financial health, despite modest revenue growth.

Income Statement

Gap Inc shows strong recovery and steady growth in recent years. The Gross Profit Margin for TTM (Trailing-Twelve-Months) is 41.38%, indicating good cost management. The Net Profit Margin is 5.80%, an improvement from previous years. Revenue growth is modest at 0.50% from the prior year, showing stability. The EBIT Margin is 7.70% and EBITDA Margin is 10.68%, reflecting healthy operational efficiency.

Balance Sheet

Gap Inc's Balance Sheet highlights a moderate Debt-to-Equity ratio of 1.65, suggesting a balanced leverage situation. The Return on Equity (ROE) for TTM is 26.47%, which is robust and indicates effective use of equity. The Equity Ratio stands at 28.71%, reflecting adequate equity base compared to total assets.

Cash Flow

The company has a stable cash flow position, with Operating Cash Flow to Net Income Ratio at 1.50, indicating strong cash earnings. The Free Cash Flow to Net Income Ratio is 1.00, demonstrating efficient cash conversion. Free Cash Flow growth has been positive, though it shows a decline from the previous year.

Breakdown	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	15.09B	14.89B	15.62B	16.67B	13.80B
Gross Profit	6.23B	5.78B	5.36B	6.64B	4.71B
EBITDA	1.72B	1.17B	489.43M	994.00M	-403.00M
Net Income	844.00M	502.00M	-202.00M	256.00M	-665.00M
Balance Sheet
Total Assets	11.88B	11.04B	11.39B	12.76B	13.77B
Cash, Cash Equivalents and Short-Term Investments	2.59B	1.87B	1.22B	877.00M	2.40B
Total Debt	5.47B	5.44B	6.02B	6.25B	7.66B
Total Liabilities	8.62B	8.45B	9.15B	10.04B	11.15B
Stockholders Equity	3.26B	2.60B	2.23B	2.72B	2.61B
Cash Flow
Free Cash Flow	1.04B	1.11B	-78.00M	115.00M	-155.00M
Operating Cash Flow	1.49B	1.53B	607.00M	809.00M	237.00M
Investing Cash Flow	-692.00M	-334.00M	-227.00M	-446.00M	-510.00M
Financing Cash Flow	-321.00M	-567.00M	6.00M	-1.47B	895.00M

Gap Inc Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 20.72
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GAP, the sentiment is Negative. The current price of 20.72 is below the 20-day moving average (MA) of 21.65, below the 50-day MA of 23.04, and below the 200-day MA of 22.15, indicating a bearish trend. The MACD of -0.50 indicates Positive momentum. The RSI at 40.35 is Neutral, neither overbought nor oversold. The STOCH value of 18.65 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GAP.

Gap Inc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ANF	79 Outperform	$4.56B	9.43	46.98%	―	12.54%	25.47%
URBN	79 Outperform	$6.72B	15.71	19.55%	―	8.38%	52.18%
BKE	78 Outperform	$2.46B	12.37	44.55%	7.85%	-1.08%	-8.20%
GAP	71 Outperform	$7.53B	8.80	29.16%	3.76%	1.07%	28.03%
AEO	64 Neutral	$1.72B	10.17	12.19%	6.13%	-0.95%	-10.51%
Sector *	63 Neutral	$17.14B	11.30	-7.23%	3.13%	1.68%	-25.24%
FL	55 Neutral	$2.40B	194.63	-12.85%	―	-2.62%	0.93%

Gap Inc Corporate Events

Gap Inc Holds Annual Shareholder Meeting

On May 20, 2025, Gap Inc held its annual meeting of shareholders, where a quorum was present with 353,826,312 shares represented. During the meeting, shareholders voted to elect the directors nominated by the Board, ratified the selection of Deloitte & Touche LLP as the independent accountant for the fiscal year ending January 31, 2026, and approved the overall compensation of the company’s named executive officers on an advisory basis.

The most recent analyst rating on (GAP) stock is a Hold with a $25.00 price target. To see the full list of analyst forecasts on Gap Inc stock, see the GAP Stock Forecast page.