Gap Inc (GAP) AI Stock Analysis

• Market Cap: $8.39B
• Dividend Yield: 2.79%
• Average Volume (3M): 9.03M
• Price to Earnings (P/E): 9.7
• Beta (1Y): 1.27
• Revenue Growth: -0.05%
• EPS Growth: 15.17%
• Country: US
• Employees: 82,000
• Sector: Consumer Cyclical
• Sector Strength: 80
• Industry: Apparel - Retail
• EPS (TTM): 0.57
• Shares Outstanding: 371,047,240
• 10 Day Avg. Volume: 13,576,311
• 30 Day Avg. Volume: 9,029,964
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.23
• Enterprise Value/Revenue: 0.68
• Enterprise Value/Gross Profit: 1.65
• Enterprise Value/Ebitda: 5.84
• 1Y Price Target: $24.93
• Price Target Upside: 4.18% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

• Rating: 75 Outperform
• Price Target: $25.00 ▲(4.47% Upside)

Gap Inc. receives a strong overall score due to its solid financial performance, positive technical indicators, and attractive valuation. The earnings call highlighted strong brand performance and financial results, though challenges like Athleta's underperformance and tariff impacts remain. The company's high leverage and need for improved cash flow generation are areas to watch.

Positive Factors

Consumer Engagement

GAP has conducted extensive consumer research, engaging thousands of customers nationwide, revealing strong enthusiasm for beauty offerings from its namesake brands.

Sales Momentum

Management confirmed that July's momentum has sustained into August, supported by a favorable response to new Fall products and marketing activations.

Strategic Expansion

GAP's expansion into beauty and accessories is more than opportunistic—it's a strategic extension of its transformation playbook.

Negative Factors

Athleta Performance

Athleta lagged the group with a -9% comp decline and management focused on clearing out inventories, which pressured overall gross margins during the quarter.

Tariffs Impact

Tariffs remain a significant headwind, likely keeping the stock's P/E rangebound.

Uncertainty in Consumer Spending

Uncertainty surrounding US consumer spending and tariffs likely keeps the stock's P/E rangebound.

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 clothing, accessories, and personal care products across its various brands. The company operates a multi-channel retail strategy, combining brick-and-mortar stores with a robust online shopping platform, which allows for wider market reach and increased sales opportunities. Key revenue streams include direct sales from retail locations, e-commerce sales, and wholesale distribution to third-party retailers. Additionally, Gap Inc. has entered into strategic partnerships and collaborations with other brands and influencers to enhance its product offerings and drive customer engagement. Seasonal promotions, loyalty programs, and targeted marketing campaigns also contribute significantly to its earnings, helping to attract and retain customers in a competitive retail environment.

Gap Inc Financial Statement Overview

Summary

Gap Inc presents a robust financial profile characterized by improved profitability, efficient operations, and solid cash management. While revenue growth is steady, the company maintains strong margins and returns. The leverage is moderate, with a healthy equity position.

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	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	15.17B	15.09B	14.89B	15.62B	16.67B	13.80B
Gross Profit	6.23B	6.23B	5.78B	5.36B	6.64B	4.71B
EBITDA	1.76B	1.72B	1.17B	489.43M	994.00M	-403.00M
Net Income	889.00M	844.00M	502.00M	-202.00M	256.00M	-665.00M
Balance Sheet
Total Assets	12.15B	11.88B	11.04B	11.39B	12.76B	13.77B
Cash, Cash Equivalents and Short-Term Investments	2.43B	2.59B	1.87B	1.22B	877.00M	2.40B
Total Debt	5.59B	5.47B	5.44B	6.02B	6.25B	7.66B
Total Liabilities	8.71B	8.62B	8.45B	9.15B	10.04B	11.15B
Stockholders Equity	3.43B	3.26B	2.60B	2.23B	2.72B	2.61B
Cash Flow
Free Cash Flow	769.00M	1.04B	1.11B	-78.00M	115.00M	-155.00M
Operating Cash Flow	1.22B	1.49B	1.53B	607.00M	809.00M	237.00M
Investing Cash Flow	-431.00M	-692.00M	-334.00M	-227.00M	-446.00M	-510.00M
Financing Cash Flow	-489.00M	-321.00M	-567.00M	6.00M	-1.47B	895.00M

Gap Inc Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 23.93
• 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 23.93 is above the 20-day moving average (MA) of 21.30, above the 50-day MA of 21.13, and above the 200-day MA of 22.11, indicating a bullish trend. The MACD of 0.59 indicates Negative momentum. The RSI at 73.36 is Negative, neither overbought nor oversold. The STOCH value of 92.52 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
BKE	78 Outperform	$2.94B	14.40	43.13%	6.47%	1.62%	-2.57%
ANF	76 Outperform	$4.38B	8.75	43.30%	―	9.34%	10.61%
GAP	75 Outperform	$8.39B	9.72	28.07%	2.79%	-0.05%	15.17%
AEO	75 Outperform	$2.24B	13.83	12.17%	2.66%	-2.73%	-16.71%
URBN	74 Outperform	$6.06B	13.08	19.72%	―	9.63%	56.06%
Sector *	61 Neutral	$17.96B	13.14	-5.36%	3.00%	1.25%	-13.95%
FL	49 Neutral	$2.30B	194.63	-13.84%	―	-3.58%	-4.20%

Gap Inc Corporate Events

Gap Inc Announces New CEO for Athleta

On July 29, 2025, Gap Inc. announced that Chris Blakeslee will step down as President and CEO of Athleta, effective July 31, 2025, with his last day being November 3, 2025. Maggie Gauger, with over 20 years of leadership experience in women’s active apparel, will succeed him starting August 1, 2025. Gauger’s appointment is part of Gap Inc.’s strategy to accelerate Athleta’s growth in the women’s active market, leveraging her expertise in business transformation and consumer engagement. This leadership transition aims to further Athleta’s mission of empowering women and enhancing its market position.