NYSE:GAP: good value for what you're paying.

Last update: Oct 14, 2024

Our stock screening tool has identified GAP INC/THE (NYSE:GAP) as an undervalued gem with strong fundamentals. NYSE:GAP boasts decent financial health and profitability while maintaining an attractive price point. We'll break it down further.

ChartMill's Evaluation of Valuation

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NYSE:GAP, the assigned 8 reflects its valuation:

A Price/Earnings ratio of 10.74 indicates a reasonable valuation of GAP.
Based on the Price/Earnings ratio, GAP is valued cheaply inside the industry as 83.47% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of GAP to the average of the S&P500 Index (31.52), we can say GAP is valued rather cheaply.
A Price/Forward Earnings ratio of 10.56 indicates a reasonable valuation of GAP.
Compared to the rest of the industry, the Price/Forward Earnings ratio of GAP indicates a somewhat cheap valuation: GAP is cheaper than 78.51% of the companies listed in the same industry.
GAP is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.55, which is the current average of the S&P500 Index.
GAP's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. GAP is cheaper than 83.47% of the companies in the same industry.
94.21% of the companies in the same industry are more expensive than GAP, based on the Price/Free Cash Flow ratio.
GAP's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
GAP's earnings are expected to grow with 16.09% in the coming years. This may justify a more expensive valuation.

Assessing Profitability for NYSE:GAP

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NYSE:GAP has earned a 5 out of 10:

GAP has a Return On Assets of 6.22%. This is in the better half of the industry: GAP outperforms 71.90% of its industry peers.
With a decent Return On Equity value of 25.05%, GAP is doing good in the industry, outperforming 79.34% of the companies in the same industry.
With a decent Return On Invested Capital value of 9.33%, GAP is doing good in the industry, outperforming 73.55% of the companies in the same industry.
The Profit Margin of GAP (4.52%) is better than 73.55% of its industry peers.
With a decent Operating Margin value of 5.58%, GAP is doing good in the industry, outperforming 69.42% of the companies in the same industry.
Looking at the Gross Margin, with a value of 39.72%, GAP is in the better half of the industry, outperforming 60.33% of the companies in the same industry.

Understanding NYSE:GAP's Health

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NYSE:GAP was assigned a score of 5 for health:

The Debt to FCF ratio of GAP is 1.29, which is an excellent value as it means it would take GAP, only 1.29 years of fcf income to pay off all of its debts.
GAP has a Debt to FCF ratio of 1.29. This is in the better half of the industry: GAP outperforms 76.03% of its industry peers.
Even though the debt/equity ratio score it not favorable for GAP, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
Looking at the Quick ratio, with a value of 0.80, GAP is in the better half of the industry, outperforming 66.94% of the companies in the same industry.

Growth Assessment of NYSE:GAP

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:GAP has received a 4 out of 10:

GAP shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 10250.00%, which is quite impressive.
Based on estimates for the next years, GAP will show a quite strong growth in Earnings Per Share. The EPS will grow by 14.94% on average per year.
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

More Decent Value stocks can be found in our Decent Value screener.

Our latest full fundamental report of GAP contains the most current fundamental analsysis.

Disclaimer

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.