Investors should take notice of NYSE:GAP—it offers a great deal for the fundamentals it presents.

Last update: Jan 30, 2025

GAP INC/THE (NYSE:GAP) is a hidden gem identified by our stock screening tool, featuring undervaluation and robust fundamentals. NYSE:GAP showcases decent financial health and profitability, coupled with an attractive price. Let's dig deeper into the analysis.

Deciphering NYSE:GAP's Valuation Rating

ChartMill assigns a proprietary Valuation Rating to each stock. The score is computed by evaluating various valuation aspects, like price to earnings and free cash flow, both absolutely as relative to the market and industry. NYSE:GAP was assigned a score of 8 for valuation:

GAP is valuated reasonably with a Price/Earnings ratio of 11.36.
87.93% of the companies in the same industry are more expensive than GAP, based on the Price/Earnings ratio.
GAP is valuated cheaply when we compare the Price/Earnings ratio to 28.28, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 11.31, the valuation of GAP can be described as reasonable.
Compared to the rest of the industry, the Price/Forward Earnings ratio of GAP indicates a somewhat cheap valuation: GAP is cheaper than 78.45% of the companies listed in the same industry.
GAP's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 91.29.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of GAP indicates a rather cheap valuation: GAP is cheaper than 88.79% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, GAP is valued cheaply inside the industry as 91.38% of the companies are valued more expensively.
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 17.89% in the coming years. This may justify a more expensive valuation.

Exploring NYSE:GAP's Profitability

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NYSE:GAP has achieved a 5:

The Return On Assets of GAP (6.94%) is better than 75.86% of its industry peers.
GAP has a better Return On Equity (26.25%) than 81.03% of its industry peers.
With a decent Return On Invested Capital value of 11.44%, GAP is doing good in the industry, outperforming 76.72% of the companies in the same industry.
With a decent Profit Margin value of 5.40%, GAP is doing good in the industry, outperforming 78.45% of the companies in the same industry.
GAP's Operating Margin of 7.10% is fine compared to the rest of the industry. GAP outperforms 75.86% of its industry peers.
Looking at the Gross Margin, with a value of 41.27%, GAP is in the better half of the industry, outperforming 62.93% of the companies in the same industry.

Evaluating Health: NYSE:GAP

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 6 for health:

Looking at the Altman-Z score, with a value of 2.75, GAP is in the better half of the industry, outperforming 60.34% of the companies in the same industry.
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 an excellent Debt to FCF ratio value of 1.34, GAP belongs to the best of the industry, outperforming 80.17% of the companies in the same industry.
GAP has a Debt/Equity ratio of 0.47. This is a healthy value indicating a solid balance between debt and equity.
GAP has a better Current ratio (1.54) than 62.07% of its industry peers.
The Quick ratio of GAP (0.84) is better than 69.83% of its industry peers.

Growth Examination 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.
Based on estimates for the next years, GAP will show a quite strong growth in Earnings Per Share. The EPS will grow by 15.10% on average per year.
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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Check the latest full fundamental report of GAP for a complete fundamental analysis.

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.