Gap Inc (GAP)
NYSE:GAP
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Gap Inc
(NYSE:GAP)
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Rating:63Neutral
Price Target:
$22.50
▼(-16.73% Downside)
Action:Reiterated
Date:05/16/26
The score is driven primarily by improved fundamentals and a constructive outlook (stabilized profitability/cash flow and guidance for continued margin progress), supported by reasonable valuation and a solid dividend. These positives are tempered by elevated leverage and notably weak technical signals (below key moving averages with negative momentum), plus near-term tariff and Athleta risks highlighted on the call.
Positive Factors
Strong cash generation and disciplined capital returns
Sustained operating cash flow (~$1.3B) and positive free cash flow ($823M) provide durable liquidity to fund capex, strategic investments, dividends and buybacks. This cash profile lowers refinancing risk, supports continued transformation spending, and offers flexibility amid retail cyclicality.
Negative Factors
Elevated leverage relative to retail peers
A debt-to-equity ratio near 1.5 leaves Gap more exposed to demand downturns and interest-cost variability than lower-levered peers. For a cyclical apparel retailer, elevated leverage can constrain strategic flexibility, increase refinancing risk, and amplify earnings volatility during soft retail cycles.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation and disciplined capital returns
Sustained operating cash flow (~$1.3B) and positive free cash flow ($823M) provide durable liquidity to fund capex, strategic investments, dividends and buybacks. This cash profile lowers refinancing risk, supports continued transformation spending, and offers flexibility amid retail cyclicality.
Read all positive factors
Gap Inc (GAP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.69B
Dividend Yield2.45%
Average Volume (3M)8.10M
Price to Earnings (P/E)15.3
Beta (1Y)1.07
Revenue Growth1.86%
EPS Growth-2.54%
CountryUS
Employees82,000
SectorConsumer Cyclical
Sector Strength84
IndustryApparel - Retail
Share Statistics
EPS (TTM)2.18
Shares Outstanding365,340,180
10 Day Avg. Volume6,518,439
30 Day Avg. Volume8,103,316
Financial Highlights & Ratios
PEG Ratio-4.77
Price to Book (P/B)2.75
Price to Sales (P/S)0.68
P/FCF Ratio12.68
Enterprise Value/Market Cap1.37
Enterprise Value/Revenue0.69
Enterprise Value/Gross Profit1.69
Enterprise Value/Ebitda6.34
Forecast
1Y Price Target
$30.60Price Target Upside13.25% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering11
EPS Forecast (FY)2.3
Revenue Forecast (FY)$15.74B
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, f...
How the Company Makes Money
Gap Inc. primarily makes money by selling branded apparel and accessories to consumers and wholesale partners. The core revenue stream is net sales of merchandise across its brand portfolio, generated through (1) direct-to-consumer sales, includin...
Gap Inc Earnings Call Summary
Earnings Call Date:Mar 05, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 21, 2026
Earnings Call Sentiment Positive
The call conveyed a generally positive tone driven by multi-quarter momentum across Old Navy, Gap and Banana Republic, strong full-year gross margin (40.8%), solid cash generation ($3.0B cash, $1.3B operating cash, $823M FCF), and a disciplined capital allocation plan including a $1B buyback authorization and dividend increase. Key strategic initiatives (Encore loyalty, Beauty & Accessories expansion, Fashiontainment, AI/tech investments) and a confident 2026 outlook further support upside. Offsetting these positives are material tariff-driven margin headwinds (notably a ~200bp Q4/Q1 impact), an EPS decline in the quarter, inventory cost increases (+7% YoY) and continued weakness at Athleta, which will require time and investment to fix. On balance, the highlights (consistent comp growth, margin resilience, cash strength, and clear strategic roadmap) outweigh the lowlights (tariff pressure and Athleta weakness), supporting a constructive view for the company's trajectory while acknowledging near-term cadence risks.Positive Updates
Consistent Comparable Sales Momentum
Fourth quarter comparable sales +3% (eighth consecutive quarter of positive comps); full-year comparable sales +3%; second consecutive year of top-line growth with full-year net sales +2% (at high end of outlook).
Negative Updates
Athleta Sales Decline
Athleta Q4 net sales $354M, down 11% YoY and comps down 10%; full-year comps for Athleta down ~9%; company expects negative mid-to-high single-digit sales declines for Athleta in H1 2026 and notes the brand is a work in progress undergoing a leadership and assortment reset.
Read all updates
Q4-2025 Updates
Positive
Negative
Consistent Comparable Sales Momentum
Fourth quarter comparable sales +3% (eighth consecutive quarter of positive comps); full-year comparable sales +3%; second consecutive year of top-line growth with full-year net sales +2% (at high end of outlook).
Read all positive updates
Company Guidance
The company guided fiscal 2026 to modest top‑line growth and continued margin improvement, forecasting net sales up about 2%–3% (with continued comp growth at the three largest brands and Athleta down mid‑to‑high single digits in H1), gross margin flat to slightly up versus 40.8% in 2025 (plan assumes net tariff impact neutral for the full year but a ~150‑bp H1 headwind that flips to a ~150‑bp H2 tailwind; Q1 tariff headwind ~200 bps, Q2 ~100 bps), adjusted operating margin of about 7.3%–7.5%, adjusted EPS $2.20–$2.35 (+4%–10% year‑over‑year) and reported EPS $2.71–$2.86 (includes an estimated $0.51 net benefit from a legal settlement and $50M pledged donation); Q1 guidance calls for net sales up 1%–2% (implied comps ~2.5%–3.5% after a ~150‑bp credit‑card spread), Q1 gross margin down ~150–200 bps vs last year’s 41.8% (underlying flat to +50 bps), adjusted SG&A ~35% of sales, an expectation to capture ~$150M of incremental savings, capital expenditures of roughly $650M, interest income ~$10–15M, a ~27% tax rate, a $1B share‑repurchase authorization and a raised Q1 dividend of $0.175/share (~+6%).Gap Inc Financial Statement Overview
Summary
Income Statement
71
Positive
Balance Sheet
58
Neutral
Cash Flow
63
Positive
| Breakdown | Jan 2026 | Jan 2025 | Jan 2024 | Jan 2023 | Jan 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 15.37B | 15.09B | 14.89B | 15.62B | 16.67B |
| Gross Profit | 6.27B | 6.23B | 5.78B | 5.36B | 6.64B |
| EBITDA | 1.61B | 1.72B | 1.17B | 489.43M | 994.00M |
| Net Income | 816.00M | 844.00M | 502.00M | -202.00M | 256.00M |
Balance Sheet | |||||
| Total Assets | 12.63B | 11.88B | 11.04B | 11.39B | 12.76B |
| Cash, Cash Equivalents and Short-Term Investments | 3.00B | 2.59B | 1.87B | 1.22B | 877.00M |
| Total Debt | 5.61B | 5.47B | 5.44B | 6.02B | 6.25B |
| Total Liabilities | 8.83B | 8.62B | 8.45B | 9.15B | 10.04B |
| Stockholders Equity | 3.80B | 3.26B | 2.60B | 2.23B | 2.72B |
Cash Flow | |||||
| Free Cash Flow | 823.00M | 1.04B | 1.11B | -78.00M | 115.00M |
| Operating Cash Flow | 1.29B | 1.49B | 1.53B | 607.00M | 809.00M |
| Investing Cash Flow | -600.00M | -692.00M | -334.00M | -227.00M | -446.00M |
| Financing Cash Flow | -419.00M | -321.00M | -567.00M | 6.00M | -1.47B |
Gap Inc Technical Analysis
Positive
27.02
Price Trends
25.72
Positive
26.15
Positive
23.85
Positive
Market Momentum
0.28
Negative
61.16
Neutral
74.39
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 27.02 is above the 20-day moving average (MA) of 25.07, above the 50-day MA of 25.72, and above the 200-day MA of 23.85, indicating a bullish trend. The MACD of 0.28 indicates Negative momentum. The RSI at 61.16 is Neutral, neither overbought nor oversold. The STOCH value of 74.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GAP.
Gap Inc Risk Analysis
Gap Inc disclosed 30 risk factors in its most recent earnings report. Gap Inc reported the most risks in the "Macro & Political" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Gap Inc Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $2.48B | 7.38 | 45.18% | 6.82% | 6.58% | 6.57% | |
69 Neutral | $3.17B | 6.48 | 38.98% | ― | 6.42% | -3.25% | |
68 Neutral | $5.90B | 16.50 | 17.66% | ― | 11.07% | 18.69% | |
63 Neutral | $7.69B | 15.26 | 22.98% | 2.45% | 1.86% | -2.54% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
54 Neutral | $2.56B | 11.22 | 12.12% | 2.09% | 3.16% | -32.51% |
* Consumer Cyclical Sector Average
GAP
Gap Inc
21.05
-6.13
-22.54%
ANF
Abercrombie Fitch
70.57
-7.49
-9.60%
AEO
American Eagle
15.29
3.78
32.90%
BKE
Buckle
48.23
10.12
26.55%
URBN
Urban Outfitters
68.95
7.53
12.26%
Gap Inc Corporate Events
Executive/Board ChangesShareholder Meetings
Gap Shareholders Back Board, Auditor and Executive Pay
Positive
May 15, 2026
Gap Inc. held its annual meeting of shareholders on May 12, 2026, with 342,882,129 of 365,340,191 eligible shares represented, establishing a quorum for voting. All board-nominated directors, including CEO Richard Dickson and members of the Fisher...
Business Operations and StrategyExecutive/Board Changes
Gap Updates Equity Award Agreements Under Long-Term Plan
Positive
Mar 12, 2026
On March 12, 2026, Gap Inc. adopted a suite of updated equity award agreements under its 2016 Long-Term Incentive Plan, including new forms for restricted stock units, deferred restricted stock units, performance shares, deferred performance share...
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Gap Highlights Strong 2025 Results, Boosts Capital Returns
Positive
Mar 5, 2026
Gap Inc. reported that for the fourth quarter and fiscal year ended Jan. 31, 2026, net sales rose 2% to $15.4 billion, marking a second consecutive year of topline growth and an eighth straight quarter of positive comparable sales. Operating incom...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.