Gap Inc (GAP) AI Stock Analysis

• Market Cap: $8.39B
• Dividend Yield: 2.75%
• Average Volume (3M): 10.91M
• Price to Earnings (P/E): 9.7
• Beta (1Y): 1.19
• Revenue Growth: -0.05%
• EPS Growth: 15.17%
• Country: US
• Employees: 82,000
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Apparel - Retail
• EPS (TTM): 0.57
• Shares Outstanding: 371,047,240
• 10 Day Avg. Volume: 10,099,706
• 30 Day Avg. Volume: 10,906,723
• PEG Ratio: 0.17
• Price to Book (P/B): 2.77
• Price to Sales (P/S): 0.60
• P/FCF Ratio: 8.71
• 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: $24.71
• Price Target Upside: 8.05% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14

• Rating: 75 Outperform
• Price Target: $25.00 ▲(9.31% 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

Strategic Expansion

Gap's expansion into beauty and accessories represents a strategic move to diversify its product offerings, tapping into a growing market segment and enhancing its competitive edge. This initiative could drive long-term revenue growth and strengthen brand relevance.

Brand Performance

Consistent positive comparable sales growth for the Gap brand indicates successful brand reinvigoration and strong market positioning, contributing to sustained revenue and profitability.

Cash Reserves

Strong cash reserves provide Gap with financial flexibility to invest in growth initiatives, manage debt, and navigate economic uncertainties, supporting long-term stability and strategic investments.

Negative Factors

High Leverage

Gap's high leverage poses a risk to financial stability, potentially limiting its ability to invest in growth opportunities and increasing vulnerability to economic downturns.

Athleta's Underperformance

Athleta's underperformance highlights challenges in aligning product offerings with customer expectations, which may hinder growth in the activewear segment and impact overall brand performance.

Tariff Impact

Tariff impacts on operating margins could pressure profitability, necessitating strategic adjustments to mitigate cost increases and maintain competitive pricing.

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. shows strong revenue growth and profitability with a gross profit margin of 41.1% and a net profit margin of 5.9%. However, the high debt-to-equity ratio of 1.63 indicates significant leverage, and cash flow generation needs improvement with a negative free cash flow growth rate of -12.5%.

Income Statement

Gap Inc. has shown a positive trend in revenue growth, with a TTM revenue growth rate of 3.3%. The gross profit margin is strong at 41.1%, indicating efficient cost management. The net profit margin is moderate at 5.9%, reflecting decent profitability. EBIT and EBITDA margins are healthy, suggesting good operational efficiency. Overall, the income statement reflects a stable and improving financial performance.

Balance Sheet

The balance sheet shows a high debt-to-equity ratio of 1.63, indicating significant leverage, which could pose a risk if not managed properly. However, the return on equity is robust at 27.0%, suggesting effective use of equity to generate profits. The equity ratio is moderate, reflecting a balanced asset structure. Overall, the balance sheet indicates a need for careful debt management but shows strong equity returns.

Cash Flow

The cash flow statement reveals a decline in free cash flow growth, with a negative rate of -12.5%. The operating cash flow to net income ratio is moderate at 0.38, indicating that operating cash flow covers net income adequately. The free cash flow to net income ratio is 0.63, showing a reasonable conversion of net income to free cash flow. Overall, the cash flow statement suggests a need for improvement in free cash flow generation.

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: 22.87
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 22.87 is below the 20-day moving average (MA) of 23.07, above the 50-day MA of 21.46, and above the 200-day MA of 22.14, indicating a neutral trend. The MACD of 0.33 indicates Positive momentum. The RSI at 52.92 is Neutral, neither overbought nor oversold. The STOCH value of 36.00 is Neutral, 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	81 Outperform	3.01B	15.07	46.12%	6.62%	1.62%	-2.57%
URBN	79 Outperform	6.39B	13.93	18.42%	―	9.63%	56.06%
ANF	77 Outperform	4.19B	8.43	41.86%	―	9.34%	10.61%
GAP	75 Outperform	$8.39B	9.72	28.07%	2.75%	-0.05%	15.17%
AEO	66 Neutral	3.03B	17.30	12.76%	2.79%	-2.73%	-16.71%
FL	44 Neutral	2.29B	-5.94	-14.93%	―	-3.58%	-4.20%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%

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.