Gap Inc (GAP) AI Stock Analysis

• Market Cap: $10.42B
• Dividend Yield: 2.3%
• Average Volume (3M): 8.93M
• Price to Earnings (P/E): 12.5
• Beta (1Y): 1.17
• Revenue Growth: 0.29%
• EPS Growth: 3.65%
• Country: US
• Employees: 82,000
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Apparel - Retail
• EPS (TTM): 0.62
• Shares Outstanding: 371,921,750
• 10 Day Avg. Volume: 8,965,374
• 30 Day Avg. Volume: 8,929,568
• 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: 1.12
• Enterprise Value/Revenue: 0.76
• Enterprise Value/Gross Profit: 1.86
• Enterprise Value/Ebitda: 6.80
• 1Y Price Target: $29.29
• Price Target Upside: 4.53% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15
• EPS Forecast (FY): 2.15
• Revenue Forecast (FY): $15.37B

• Rating: 76 Outperform
• Price Target: $30.00 ▲(7.07% Upside)

Gap Inc. receives a strong overall stock score of 76, driven by robust financial performance and a favorable valuation. The positive earnings call and strategic board appointment further bolster confidence in the company's growth prospects. Technical indicators support a positive outlook, though challenges such as Athleta's performance and tariff impacts on margins warrant attention.

Positive Factors

Revenue Growth

Strong revenue growth reflects robust market demand and effective brand strategies, supporting long-term business expansion.

Cash Generation

Strong cash generation enhances financial flexibility, enabling investment in growth initiatives and debt reduction.

Supply Chain Advancements

Technological advancements in the supply chain improve efficiency and scalability, supporting long-term operational success.

Negative Factors

Athleta's Performance Challenges

Declining sales at Athleta indicate brand-specific challenges that may require strategic adjustments to regain market position.

Impact of Tariffs on Margins

Tariff impacts on margins could pressure profitability, necessitating cost management strategies to maintain financial health.

Debt Reliance

High reliance on debt financing poses a risk if market conditions worsen, potentially affecting financial stability.

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 its clothing and accessories across its various brands. The company operates a multi-channel retail model, which includes physical stores, e-commerce websites, and mobile applications, allowing it to reach a broad customer base. Key revenue streams include direct sales from retail locations, online sales, and wholesale partnerships with other retailers. Additionally, Gap Inc. benefits from seasonal promotions, loyalty programs, and collaborations with other brands, which drive customer engagement and enhance sales. The company's strategic focus on inventory management, marketing initiatives, and customer experiences also contribute to its overall earnings.

Gap Inc Financial Statement Overview

Summary

Gap Inc. demonstrates solid financial performance with significant improvements in revenue growth and profitability. The company has effectively managed its leverage, resulting in a healthier balance sheet. Cash flow generation is strong, although historical volatility in growth rates suggests the need for cautious cash flow management.

Income Statement

Gap Inc. has shown a strong recovery in its income statement metrics. The TTM data indicates a significant revenue growth rate of 74.5%, reflecting a robust rebound. Gross profit margin is healthy at 41%, and the net profit margin has improved to 5.57%. EBIT and EBITDA margins are also solid, indicating effective cost management and operational efficiency. However, the company has experienced fluctuations in revenue growth in previous years, which could pose a risk if not managed well.

Balance Sheet

The balance sheet shows a moderate level of financial stability. The debt-to-equity ratio has improved to 1.51 in the TTM period, indicating better leverage management compared to previous years. Return on equity is strong at 24.91%, reflecting good profitability relative to shareholder equity. However, the equity ratio is relatively low, suggesting a higher reliance on debt financing, which could be a risk if market conditions change.

Cash Flow

Cash flow metrics indicate a positive trend with a free cash flow growth rate of 130% in the TTM period, showcasing strong cash generation capabilities. The operating cash flow to net income ratio is 0.37, and the free cash flow to net income ratio is 0.64, both indicating efficient cash flow management. Despite these strengths, the company has experienced volatility in free cash flow growth in past periods, which could impact future cash flow stability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	15.28B	15.09B	14.89B	15.62B	16.67B	13.80B
Gross Profit	6.27B	6.23B	5.78B	5.36B	6.64B	4.71B
EBITDA	1.72B	1.72B	1.17B	489.43M	994.00M	-403.00M
Net Income	851.00M	844.00M	502.00M	-202.00M	256.00M	-665.00M
Balance Sheet
Total Assets	12.37B	11.88B	11.04B	11.39B	12.76B	13.77B
Cash, Cash Equivalents and Short-Term Investments	2.52B	2.59B	1.87B	1.22B	877.00M	2.40B
Total Debt	5.52B	5.47B	5.44B	6.02B	6.25B	7.66B
Total Liabilities	8.72B	8.62B	8.45B	9.15B	10.04B	11.15B
Stockholders Equity	3.65B	3.26B	2.60B	2.23B	2.72B	2.61B
Cash Flow
Free Cash Flow	779.00M	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	-443.00M	-692.00M	-334.00M	-227.00M	-446.00M	-510.00M
Financing Cash Flow	-486.00M	-321.00M	-567.00M	6.00M	-1.47B	895.00M

Gap Inc Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 28.02
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• 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 28.02 is above the 20-day moving average (MA) of 26.65, above the 50-day MA of 24.36, and above the 200-day MA of 22.24, indicating a bullish trend. The MACD of 0.84 indicates Negative momentum. The RSI at 66.90 is Neutral, neither overbought nor oversold. The STOCH value of 79.25 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
ANF	78 Outperform	$5.55B	11.61	40.72%	―	7.57%	1.75%
URBN	78 Outperform	$7.29B	15.38	19.34%	―	11.09%	51.51%
AEO	77 Outperform	$4.72B	24.03	12.36%	2.09%	-1.15%	-0.98%
GAP	76 Outperform	$10.42B	12.55	25.10%	2.30%	0.29%	3.65%
BKE	72 Outperform	$2.87B	13.79	41.26%	6.82%	4.67%	3.46%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
FL	44 Neutral	―	―	―	―	-3.58%	-4.20%

Gap Inc Corporate Events

Gap Inc Appoints Jody Gerson to Board of Directors

On September 15, 2025, Gap Inc. announced the appointment of Jody Gerson, Chairman and CEO of Universal Music Publishing Group, to its Board of Directors. Gerson, a pioneer in the music industry, is expected to enhance Gap’s strategy at the intersection of fashion and music, leveraging her extensive experience to strengthen the brand’s cultural resonance and support its long-term strategic goals.