Gap, Inc. (The)

Valuation Analysis

About the Company

The Gap, Inc. operates as an apparel retail company in the United States, Canada, Japan, Taiwan, and internationally. The company offers apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, and Athleta brands. The company offers its products through company-operated stores, franchise stores, websites, and third-party arrangements, as well as licensing partnerships. It has franchise agreements to operate Old Navy, Gap, Banana Republic, and Athleta in Asia, Europe, Latin America, the Middle East, and Africa. The Gap, Inc. was incorporated in 1969 and is headquartered in San Francisco, California.

Gap, Inc. (The) Stock at a Glance

Gap, Inc. (The) (GAP) is currently trading at $21.89 with a market capitalization of $7.9B. The trailing P/E ratio stands at 8.69x, with a forward P/E of 8.39x. The 52-week range spans from $18.68 to $29.36; the current price is 25.4% below the yearly high. Year-over-year revenue growth stands at +1.0%. The net profit margin stands at 6.25%.

💰 Dividend

Gap, Inc. (The) pays an annual dividend of $0.70 per share, representing a yield of 3.2%. The payout ratio stands at 26.59%.

📊 Analyst Rating

17 analysts rate Gap, Inc. (The) (GAP) on consensus: Buy. The average price target is $27.55, implying +25.87% from the current price. Analyst price targets range from $20.00 to $40.00.

Gap, Inc. (The): The Investment Case in Detail

Gap, Inc. (The) (GAP) operates in the Consumer Cyclical — specifically Apparel Retail — and is headquartered in United States. Below is a structured read of the investment case built directly from the latest fundamentals, valuation multiples, analyst positioning and smart-money flows. Each section translates raw numbers into the investment logic they imply, so you can decide whether the risk/reward fits your portfolio.

The Bull Case

Earnings growth of 76.5% is outpacing revenue, a sign of operational leverage — fixed costs are being absorbed across a larger base. Return on equity of 27.58% places management among the most capital-efficient operators in the public market — every euro of shareholder capital is working hard. Wall Street consensus sits at Buy with an average price target implying roughly 25.87% upside from current levels — analyst sentiment is firmly constructive.

The Bear Case

Revenue growth has slowed to just 1%, which is below nominal GDP — the business is no longer outgrowing the broader economy. With a beta near 2.01, the share price moves sharply more than the broader market — drawdowns in market corrections can be unusually severe and require strong nerves. Short interest sits at 12.86% of float — a meaningful contingent of professionals is positioned for the share to fall, which deserves attention even if their thesis may turn out to be wrong.

Valuation in Context

The PEG ratio at 1.28 sits in the reasonable zone — the price tag is roughly aligned with the company's growth profile, neither punishing nor euphoric. The EV/EBITDA multiple of 6.12x is below the historical equity-market average — strategic acquirers would find the cash-flow profile attractive at this level.

What to Watch Next

• The dividend yield near 3.2% combined with a payout ratio of 26.59% leaves room for further hikes — a track record of consecutive raises is a strong income signal.
• The analyst consensus price target implies 25.87% upside — if the next two quarters confirm the underlying thesis, target hikes typically follow.

Investment Thesis: Strengths & Weaknesses

Technical Snapshot

Price is below both the 50- and 200-day moving averages, with 50d below 200d — a bearish picture (death-cross alignment).

Risk Profile

The data points to above-average price swings, elevated short interest (12.86%), higher leverage relative to equity.

Trading Data

💵 Dividend Info

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