NYSE:GPS is an undervalued gem with solid fundamentals.

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

Understanding NYSE:GPS's Valuation Score

To assess a stock's valuation, ChartMill utilizes a Valuation Rating on a scale of 0 to 10. This comprehensive assessment considers various valuation aspects, comparing price to earnings and cash flows, while factoring in profitability and growth. NYSE:GPS has achieved a 7 out of 10:

• Based on the Price/Earnings ratio, GPS is valued a bit cheaper than the industry average as 79.37% of the companies are valued more expensively.
• GPS is valuated cheaply when we compare the Price/Earnings ratio to 28.86, which is the current average of the S&P500 Index.
• With a Price/Forward Earnings ratio of 11.37, the valuation of GPS can be described as very reasonable.
• Compared to the rest of the industry, the Price/Forward Earnings ratio of GPS indicates a somewhat cheap valuation: GPS is cheaper than 74.60% of the companies listed in the same industry.
• GPS is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 20.69, which is the current average of the S&P500 Index.
• Based on the Enterprise Value to EBITDA ratio, GPS is valued cheaply inside the industry as 83.33% of the companies are valued more expensively.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of GPS indicates a rather cheap valuation: GPS is cheaper than 88.89% of the companies listed in the same industry.
• GPS's 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 GPS's earnings are expected to grow with 16.21% in the coming years.

Analyzing Profitability Metrics

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:GPS has achieved a 5:

• GPS has a Return On Assets of 6.22%. This is in the better half of the industry: GPS outperforms 70.63% of its industry peers.
• GPS's Return On Equity of 25.05% is amongst the best of the industry. GPS outperforms 80.95% of its industry peers.
• Looking at the Return On Invested Capital, with a value of 9.33%, GPS is in the better half of the industry, outperforming 71.43% of the companies in the same industry.
• GPS's Profit Margin of 4.52% is fine compared to the rest of the industry. GPS outperforms 73.02% of its industry peers.
• GPS has a better Operating Margin (5.58%) than 65.08% of its industry peers.

Health Assessment of NYSE:GPS

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NYSE:GPS, the assigned 5 for health provides valuable insights:

• The Debt to FCF ratio of GPS is 1.29, which is an excellent value as it means it would take GPS, only 1.29 years of fcf income to pay off all of its debts.
• The Debt to FCF ratio of GPS (1.29) is better than 76.19% of its industry peers.
• Even though the debt/equity ratio score it not favorable for GPS, 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, GPS is in the better half of the industry, outperforming 65.87% of the companies in the same industry.

Understanding NYSE:GPS's Growth

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:GPS was assigned a score of 4 for growth:

• The Earnings Per Share has grown by an impressive 1116.67% over the past year.
• Based on estimates for the next years, GPS 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.

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Check the latest full fundamental report of GPS 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.