Gap Inc (GPS, Financial), a prominent player in the Retail - Cyclical industry, has recently seen a significant uptick in its stock performance. With a current market cap of $4.08 billion and a stock price of $11.03, the company has experienced a 7.71% gain over the past week and a substantial 23.33% gain over the past three months. This positive trend is reflected in the company's GF Value, which stands at $13.89, down from $15.25 three months ago. The GF Value, defined by GuruFocus.com, calculates a stock's intrinsic value using historical multiples, past performance adjustments, and future business estimates. Currently, the stock's GF Valuation is considered modestly undervalued, an improvement from being significantly undervalued three months ago.
Company Overview
Gap Inc is a renowned retailer of apparel, accessories, and personal-care products under various brands including Gap, Old Navy, Banana Republic, and Athleta. Old Navy is the company's most profitable brand, generating more than half of Gap's sales. The firm operates approximately 2,600 stores in North America, Europe, and Asia, and franchises about 850 more in Asia, Europe, Latin America, and other regions. Gap also operates e-commerce sites, outlet stores, and specialty stores under various Gap names. Founded in 1969, Gap is based in San Francisco.
Profitability Analysis
Gap Inc's profitability is relatively high, with a Profitability Rank of 7/10. The company's Operating Margin of 1.67% is better than 38.29% of companies in the same industry. Furthermore, Gap's ROE, ROA, and ROIC, which are all better than a significant percentage of companies in the same industry, indicate a strong return on investment. The company's ROE stands at 4.67%, its ROA at 0.94%, and its ROIC at 1.57%. Over the past 10 years, Gap has had 8 years of profitability, which is better than 58.52% of companies in the same industry.
Growth Prospects
Despite its strong profitability, Gap's growth prospects are relatively low, with a Growth Rank of 1/10. However, the company's 3-year and 5-year revenue growth rates per share are better than a significant percentage of companies in the same industry. The 3-Year Revenue Growth Rate per Share is -0.60%, and the 5-Year Revenue Growth Rate per Share is 0.60%. Furthermore, the company's future total revenue growth rate is better than 11.07% of companies in the same industry, with a Total Revenue Growth Rate (Future 3Y To 5Y Est) of -1.76%.
Major Stock Holders
The top three holders of Gap Inc's stock are Dodge & Cox, Richard Pzena (Trades, Portfolio), and Ken Fisher (Trades, Portfolio). Dodge & Cox holds the largest share with 37,478,228 shares, accounting for 10.18% of the total shares. Richard Pzena (Trades, Portfolio) holds 10,165,235 shares, representing 2.76% of the total shares, while Ken Fisher (Trades, Portfolio) holds 6,053,936 shares, accounting for 1.64% of the total shares.
Competitive Landscape
Gap Inc faces stiff competition from other companies in the Retail - Cyclical industry. Its main competitors include Urban Outfitters Inc (URBN, Financial) with a market cap of $3.01 billion, American Eagle Outfitters Inc (AEO, Financial) with a market cap of $3.37 billion, and Abercrombie & Fitch Co (ANF, Financial) with a market cap of $2.96 billion.
Conclusion
In conclusion, Gap Inc's recent stock performance, profitability, and growth prospects paint a promising picture for the company. Despite facing stiff competition, the company's strong profitability and improving stock valuation suggest a positive outlook. However, the company's low growth rank indicates that there may be challenges ahead. Therefore, investors should keep a close eye on Gap Inc's performance in the coming months.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
