When you look at NYSE:GAP, it's hard to ignore the strong fundamentals, especially considering its likely undervaluation.

Last update: Nov 27, 2024

Our stock screening tool has pinpointed GAP INC/THE (NYSE:GAP) as an undervalued stock option. NYSE:GAP retains a strong financial foundation and an attractive price tag. Let's delve into the specifics below.

Assessing Valuation Metrics for NYSE:GAP

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:

The Price/Earnings ratio is 11.90, which indicates a very decent valuation of GAP.
GAP's Price/Earnings ratio is rather cheap when compared to the industry. GAP is cheaper than 85.95% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 29.61, GAP is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 11.70, the valuation of GAP can be described as reasonable.
Based on the Price/Forward Earnings ratio, GAP is valued a bit cheaper than 79.34% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 24.24, GAP is valued rather cheaply.
Based on the Enterprise Value to EBITDA ratio, GAP is valued cheaper than 85.12% of the companies in the same industry.
GAP's Price/Free Cash Flow ratio is rather cheap when compared to the industry. GAP is cheaper than 93.39% of the companies in the same industry.
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.

Profitability Insights: 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:

With a decent Return On Assets value of 6.22%, GAP is doing good in the industry, outperforming 72.73% of the companies in the same industry.
Looking at the Return On Equity, with a value of 25.05%, GAP belongs to the top of the industry, outperforming 81.82% of the companies in the same industry.
GAP has a better Return On Invested Capital (9.33%) than 72.73% of its industry peers.
GAP's Profit Margin of 4.52% is fine compared to the rest of the industry. GAP outperforms 76.86% of its industry peers.
Looking at the Operating Margin, with a value of 5.58%, GAP is in the better half of the industry, outperforming 71.90% of the companies in the same industry.
GAP has a better Gross Margin (39.72%) than 61.16% of its industry peers.

What does the Health looks like for NYSE:GAP

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NYSE:GAP has earned a 6 out of 10:

GAP's Altman-Z score of 2.77 is fine compared to the rest of the industry. GAP outperforms 65.29% of its industry peers.
GAP has a debt to FCF ratio of 1.29. This is a very positive value and a sign of high solvency as it would only need 1.29 years to pay back of all of its debts.
The Debt to FCF ratio of GAP (1.29) is better than 80.17% 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.
With a decent Current ratio value of 1.50, GAP is doing good in the industry, outperforming 60.33% of the companies in the same industry.
GAP has a Quick ratio of 0.80. This is in the better half of the industry: GAP outperforms 68.59% of its industry peers.

Growth Examination for NYSE:GAP

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NYSE:GAP was assigned a score of 4 for growth:

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.
The Earnings Per Share is expected to grow by 14.94% on average over the next years. This is quite good.
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

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

Keep in mind

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.