QualityDipStocks / Consumer Discretionary · Apparel retail
Gap GAP
Outside our quality screen, so we don’t track its dips. It’s 23% below its 52-week high.
Outside our quality screen, trading well below our fair value estimate.
- Fair value est.
- $41.89+88%
- Market Value
- $22.36at the price
- Off 52-wk high
- −23%
- Risk vs market
- Market-likebeta 1.07
5 bullish · 4 bearish See why
Key levels
Every level vs today’s $22.32
- 52-wk lowlowest close, 1 year$18.35−17.8%
- PriceFri Oct 30 close$22.32you are here
- Market Valueavg paid since Aug 27$22.36+0.2%
- 52-wk highhighest close, 1 year$29.13+30.5%
- Fair value est.base case$41.89+87.7%
Fair value estimate
How the range is computed
Ten-year free-cash-flow DCF. Same 10-year free-cash-flow model as the base: discount rate 9.5% ±1 point and growth 3.0% ±2 points. Bear = 10.5% and 1.0%; bull = 8.5% and 5.0% (both fade to 3%). A model estimate from public filings, not a forecast of where the price will go.
Price is below even the bear case.
What the price implies To be worth today’s price, GAP’s free cash flow would need to shrink about 8% a year for five years; our estimate uses 3%.
Risk vs market
How risk vs market is measured
One year of daily returns (Oct 30 to Oct 30, 252 sessions). Beta = how much GAP moved for each 1% move in the S&P 500 (SPY); 1.0 moves with the market. Volatility is the yearly standard deviation of daily returns. Past behavior, not a forecast.
Moves about in line with the market, and its own price swings are 3.6× the S&P 500’s.
- Beta vs S&P 500
- 1.07
- Volatility
- 46% vs 13% SPY
- Correlation SPY
- 0.30
- Correlation QQQ
- 0.18
Bull vs bear
Rule-based from the data on this page, strongest first. Not advice.
Top bullish points 5 of 5
ValuationOur DCF fair value estimate is $41.89, 88% above the price.
ValuationFree-cash-flow yield of 11.8% (price / FCF 8.4×): $957M of free cash in the last 12 months.
ValuationP/E of 6.5× vs a 20.9× median for the 169 Consumer Discretionary companies we cover.
Balance sheetNet cash of $992M: cash and short-term investments exceed debt (Aug 1, 2026).
ValuationEV/EBITDA of 3.2×: modest for what the business earns before interest, tax and depreciation.
Top bearish points 4 of 5
GrowthSales grew only −0.5% a year from FY2023 to FY2026.
GrowthSales grew 1.1% over the last 12 months, below the 7.0% median for the 175 Consumer Discretionary companies we cover.
GrowthDiluted EPS fell 3.2% in the last fiscal year, below the 4.8% median for the 158 Consumer Discretionary companies we cover.
QualityDoesn’t pass our quality screen: sales down vs the year-ago quarter.
Who’s talking about it
Notable investors, executives, analysts and public figures on Gap in the last 48 hours. Headlines as published, each linked. Their words, not ours.
No notable mentions in the last 48 hours. Checked Nov 1, 9:09 PM ET.
Compare with peers
Closest in size in Apparel retail
All fundamentals
P/E 6.5 · FCF yield 11.8% · ROE 34%
Valuation
- P/E
- 6.5×Consumer Discretionary median 20.9×
- Price / FCF
- 8.4×
- FCF yield
- 11.8%
- EV / EBITDA
- 3.2×
- Price / sales
- 0.53×
- Price / book
- 2.05×
- Market cap
- $8.1Bprice × diluted shares
- Enterprise value
- $7.1B
Growth
- Revenue, 12 months
- $15.3B
- Sales growth, 12 months
- +1.1%vs the 12 months before
- Sales growth, 3 yrs
- −0.5%/yrfrom FY2023
- Diluted EPS, 12 months
- $3.32
- EPS growth, last FY
- −3.2%
- Net income, 12 months
- $1.2B
- Net income growth
- +40%12 months vs before
Profitability
- Gross margin
- 43.3%
- Operating margin
- 11.0%
- Net margin
- 8.1%
- FCF margin
- 6.2%
- Return on equity
- 34%
- Return on invested capital
- 42%
Balance sheet
- Cash & short-term inv.
- $2.5B
- Total debt
- $1.5B
- Net cash
- $992M
- Debt / equity
- 0.38×
- Interest coverage
- 18.1×operating income / interest
Cash flow & returns
- Free cash flow, 12 months
- $957M
- FCF growth, 12 months
- +24%
- Dividend yield
- 3.08%$249M paid
- Payout ratio
- 20%
- Buybacks, 12 months
- $604M7.5% of market cap
- Share count, 1 year
- −4.5%diluted shares vs a year ago
- Stock-based comp
- $176M
Trailing 12 months to Aug 1, 2026; balance sheet at Aug 1, 2026. From Gap’s SEC filings. Sparklines show up to six fiscal years. n/a means we don’t hold that number, with the reason. How each is computed.
Valuation details
DCF $41.89 · MV $22.36 · FCF value $17.44
Assumes 3.0% growth for 5 years (revenue grew -0.5% a year FY23–FY26; floored at 3%), fading to 3%; 9.5% discount rate, 3% terminal growth. FCF base $2.64 a share (trailing 12 months to Aug 1, 2026), from the 10-Q filed Aug 28, 2026. Net cash $992M, not added.
Setup & signals
No setup armed
No setup armed, so there’s no trigger or stop to track yet. Reversal signal rules only run on companies that pass our quality screen.
Momentum & 52-week range
RSI 48 · 5 days 0.0%
The business
FCF $0.2B · Sales −2%
- Free cash flow, 12 months$0.2B
- Free-cash-flow yield3.1%
- Free-cash-flow margin2%
- Gross margin40%
- Operating margin7%
- Return on invested capital11%
- Return on equity34%
- Sales growth (latest quarter vs year-ago quarter)−2%
- Net debt / EBITDA2.2×
Next report
Nov 19
- DateThu Nov 19
- Consensus EPS$0.73
- Year-ago EPS$0.62
- QuarterOct/2026
From Nasdaq’s earnings calendar. A report resets Market Value.
Information only, not investment advice. Fair value estimates and talking points are rule-based model output from public data and can be wrong; stop levels are reference points, not orders. How every number is computed.
GAP is outside our quality screen
One text when a published rule fires on one of the 333 quality companies we track: the ticker, the price, the stop and a link to the numbers. Nothing else.