Gap Inc (GAP) AI Stock Analysis

• Market Cap: $10.53B
• Dividend Yield: 2.2%
• Average Volume (3M): 8.93M
• Price to Earnings (P/E): 12.5
• Beta (1Y): 1.35
• Revenue Growth: 1.32%
• EPS Growth: 65.83%
• Country: US
• Employees: 82,000
• Sector: Consumer Cyclical
• Sector Strength: 75
• Industry: Apparel - Retail
• EPS (TTM): 0.54
• Shares Outstanding: 376,603,730
• 10 Day Avg. Volume: 7,921,678
• 30 Day Avg. Volume: 8,928,067
• PEG Ratio: 7.42
• Price to Book (P/B): 2.62
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 8.21
• Enterprise Value/Market Cap: 1.11
• Enterprise Value/Revenue: 0.19
• Enterprise Value/Gross Profit: 1.56
• Enterprise Value/Ebitda: 1.84
• 1Y Price Target: $26.64
• Price Target Upside: -3.86% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

Gap Inc. is well-positioned in the retail sector, backed by strong financial performance and attractive valuation metrics. The earnings call highlighted significant achievements and positive guidance for the future, although technical analysis indicates potential resistance levels. The company's ability to continue enhancing profitability and market share while maintaining financial discipline supports a positive outlook, despite some challenges in specific segments.

Positive Factors

Brand strategy

Accelerating comp momentum indicates that GAP’s brand reinvigoration strategy is working.

Capital allocation

The company's strategy of capital allocation, including share repurchases, contributes to a substantial increase in earnings per share growth.

Financial performance

GAP reported a strong F4Q beat and provided healthy initial FY25 guidance.

Operational efficiency

Gap guided fiscal year profit above the Street, highlighting a goal of $150M in cost savings driven by operational efficiencies.

Negative Factors

Brand performance

Athleta was the only pain point of the quarter, with comp -2% as the brand saw holiday underperformance from their core customer.

Sales performance

Weather disruptions led to softer demand in early February, affecting sales performance.

Gap Inc Business Overview & Revenue Model

Company Description

Gap Inc. is a leading global retailer offering clothing, accessories, and personal care products for men, women, and children. Founded in 1969 and headquartered in San Francisco, California, the company operates a diverse portfolio of brands, including Gap, Old Navy, Banana Republic, Athleta, and Intermix. With a focus on delivering modern, stylish, and affordable apparel, Gap Inc. serves customers through a combination of company-operated stores, franchise stores, and e-commerce websites across numerous international markets.

How the Company Makes Money

Gap Inc. generates revenue primarily through the sale of apparel, accessories, and personal care products under its various brand names. Its business model is centered around direct-to-consumer sales via both physical retail locations and online platforms. The company's key revenue streams include sales from its owned retail stores, e-commerce operations, and franchised locations. Additionally, Gap Inc. benefits from strategic partnerships and collaborations that expand its market reach and appeal, as well as its loyalty programs that enhance customer engagement and retention. Seasonal promotions, marketing campaigns, and a focus on trend-responsive product lines also contribute significantly to its earnings.

Gap Inc Financial Statement Overview

Summary

Gap Inc. exhibits a solid financial foundation characterized by improved profitability, efficient cash flow generation, and a moderate leverage profile. While revenue growth is steady, the company has successfully enhanced its margins and return on equity. The balance sheet and cash flow statements reflect prudent financial management, positioning the company well to navigate competitive pressures in the retail industry. Continued focus on operational efficiency and strategic investments will be critical for sustaining growth and financial stability.

Income Statement

Gap Inc. demonstrated strong improvements in profitability with a gross profit margin of 49.59% and a net profit margin of 5.59% for the latest fiscal year. The EBIT margin rose to 7.37%, highlighting improved operational efficiency. Revenue grew by 1.32% year-over-year, indicating modest growth in a competitive retail environment. The EBITDA margin of 10.71% showcases solid earnings before interest, taxes, depreciation, and amortization. These figures suggest a positive trajectory compared to previous years, though the revenue growth remains conservative.

Balance Sheet

The balance sheet reflects a solid equity position with a debt-to-equity ratio of 1.68, indicating moderate leverage. The return on equity improved to 25.86%, underscoring efficient use of equity to generate profits. However, the equity ratio of 27.47% suggests that a significant portion of assets is financed by debt, which could pose risks if market conditions worsen. Overall, the balance sheet demonstrates balanced financial management with a focus on maintaining equity strength while leveraging debt cautiously.

Cash Flow

Gap Inc. showed robust cash flow metrics with a free cash flow to net income ratio of 1.23, reflecting effective conversion of earnings into cash. The operating cash flow to net income ratio of 1.76 further emphasizes strong cash generation capabilities. Despite a slight decline in free cash flow growth, the company's ability to generate substantial free cash flow supports its operational and strategic initiatives. The cash flow statements indicate healthy liquidity and financial flexibility.

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
7.48B	5.78B	5.36B	6.64B	4.71B
	EBIT
1.11B	622.00M	-69.00M	1.14B	-862.00M
	EBITDA
1.72B	1.17B	489.43M	994.00M	-403.00M
	Net Income Common Stockholders
844.00M	502.00M	-202.00M	256.00M	-665.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.59B	1.87B	1.22B	877.00M	2.40B
	Total Assets
11.88B	11.04B	11.39B	12.76B	13.77B
	Total Debt
5.47B	5.44B	6.02B	6.25B	7.66B
	Net Debt
3.14B	3.57B	4.80B	5.37B	5.68B
	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: Positive
• Last Price: 27.71
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GAP, the sentiment is Positive. The current price of 27.71 is above the 20-day moving average (MA) of 23.61, above the 50-day MA of 21.35, and above the 200-day MA of 22.03, indicating a bullish trend. The MACD of 1.84 indicates Negative momentum. The RSI at 76.02 is Negative, neither overbought nor oversold. The STOCH value of 94.25 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GAP.

Gap Inc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
URBN	76 Outperform	$5.69B	14.41	17.56%	―	7.71%	40.01%
GAP	73 Outperform	$10.53B	12.46	28.81%	2.20%	1.32%	65.83%
AEO	73 Outperform	$2.06B	7.37	18.80%	4.21%	1.27%	96.32%
BKE	70 Outperform	$2.12B	10.66	46.71%	3.38%	-3.44%	-11.74%
ANF	64 Neutral	$3.72B	7.16	47.77%	―	15.60%	71.45%
Sector *	62 Neutral	$6.98B	11.38	2.86%	3.90%	2.64%	-22.07%
FL	56 Neutral	$2.28B	194.06	0.62%	―	-2.20%	―