NYSE:GAP is an undervalued gem with solid fundamentals.

Consider GAP INC/THE (NYSE:GAP) as a top value stock, identified by our stock screening tool. NYSE:GAP shines in terms of profitability, solvency, and liquidity, all while remaining very reasonably priced. Let's dive deeper into the analysis.

Assessing Valuation for NYSE:GAP

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NYSE:GAP has received a 8 out of 10:

• With a Price/Earnings ratio of 11.03, the valuation of GAP can be described as very reasonable.
• 87.60% of the companies in the same industry are more expensive than GAP, based on the Price/Earnings ratio.
• When comparing the Price/Earnings ratio of GAP to the average of the S&P500 Index (27.72), we can say GAP is valued rather cheaply.
• A Price/Forward Earnings ratio of 11.11 indicates a reasonable valuation of GAP.
• Based on the Price/Forward Earnings ratio, GAP is valued a bit cheaper than 78.51% of the companies in the same industry.
• The average S&P500 Price/Forward Earnings ratio is at 22.64. GAP is valued rather cheaply when compared to this.
• GAP's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. GAP is cheaper than 90.91% of the companies in the same industry.
• Based on the Price/Free Cash Flow ratio, GAP is valued cheaper than 90.91% of the companies in the same industry.
• The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• A more expensive valuation may be justified as GAP's earnings are expected to grow with 17.59% in the coming years.

Profitability Analysis for NYSE:GAP

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NYSE:GAP scores a 5 out of 10:

• GAP's Return On Assets of 6.94% is fine compared to the rest of the industry. GAP outperforms 76.03% of its industry peers.
• With an excellent Return On Equity value of 26.25%, GAP belongs to the best of the industry, outperforming 83.47% of the companies in the same industry.
• GAP has a better Return On Invested Capital (11.44%) than 79.34% of its industry peers.
• With a decent Profit Margin value of 5.40%, GAP is doing good in the industry, outperforming 78.51% of the companies in the same industry.
• The Operating Margin of GAP (7.10%) is better than 76.86% of its industry peers.
• The Gross Margin of GAP (41.27%) is better than 61.98% of its industry peers.

Health Assessment of NYSE:GAP

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NYSE:GAP has earned a 6 out of 10:

• GAP has a Altman-Z score of 2.73. This is in the better half of the industry: GAP outperforms 62.81% of its industry peers.
• The Debt to FCF ratio of GAP is 1.34, which is an excellent value as it means it would take GAP, only 1.34 years of fcf income to pay off all of its debts.
• With a decent Debt to FCF ratio value of 1.34, GAP is doing good in the industry, outperforming 78.51% of the companies in the same industry.
• A Debt/Equity ratio of 0.47 indicates that GAP is not too dependend on debt financing.
• GAP's Current ratio of 1.54 is fine compared to the rest of the industry. GAP outperforms 61.16% of its industry peers.
• Looking at the Quick ratio, with a value of 0.84, GAP is in the better half of the industry, outperforming 70.25% of the companies in the same industry.

What does the Growth looks like for NYSE:GAP

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of NYSE:GAP, the assigned 4 reflects its growth potential:

• GAP shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 1036.84%, which is quite impressive.
• GAP is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 14.94% yearly.
• 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.

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

For an up to date full fundamental analysis you can check the fundamental report of GAP

Keep in mind

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.