Gap, Inc. (GAP)
NYSE:GAP
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Gap Inc
(NYSE:GAP)
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Rating:67Neutral
Price Target:
$23.00
▼(-14.88% Downside)
Action:Reiterated
Date:05/30/26
The score is driven by improved financial performance and strong cash generation, supported by attractive valuation (low P/E and solid dividend). These positives are partly offset by weak technical momentum (below major moving averages with negative MACD) and an earnings outlook that, while raising EPS guidance, acknowledges near-term brand and margin headwinds.
Positive Factors
Strong cash generation
Consistent multi-hundred-million-dollar free cash flow provides durable funding for capex, dividends, buybacks and strategic investments. Over 2–6 months this cash generation supports deleveraging, funds brand initiatives, and cushions cyclical retail volatility.
Negative Factors
Elevated leverage
Material debt relative to equity raises financial risk and limits strategic flexibility. Over the next several months higher leverage amplifies interest rate sensitivity, constrains ability to fund incremental investments without issuing debt or equity, and increases refinancing risk.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation
Consistent multi-hundred-million-dollar free cash flow provides durable funding for capex, dividends, buybacks and strategic investments. Over 2–6 months this cash generation supports deleveraging, funds brand initiatives, and cushions cyclical retail volatility.
Read all positive factors
Gap Inc (GAP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.87B
Dividend Yield2.45%
Average Volume (3M)8.61M
Price to Earnings (P/E)8.3
Beta (1Y)1.14
Revenue Growth1.58%
EPS Growth11.13%
CountryUS
Employees82,000
SectorConsumer Cyclical
Sector Strength84
IndustryApparel - Retail
Share Statistics
EPS (TTM)2.59
Shares Outstanding359,978,940
10 Day Avg. Volume11,137,593
30 Day Avg. Volume8,607,760
Financial Highlights & Ratios
PEG Ratio-4.77
Price to Book (P/B)2.75
Price to Sales (P/S)0.68
P/FCF Ratio12.68
Enterprise Value/Market Cap1.43
Enterprise Value/Revenue0.73
Enterprise Value/Gross Profit1.80
Enterprise Value/Ebitda6.08
Forecast
1Y Price Target
$28.15Price Target Upside4.20% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering15
EPS Forecast (FY)2.34
Revenue Forecast (FY)$15.57B
Gap Inc Business Overview & Revenue Model
Company Description
The Gap, Inc. operates as a prominent apparel retail enterprise, offering a diverse array of clothing, accessories, and personal care products for men, women, and children. These goods are marketed under its well-known brands: Old Navy, Gap, Banan...
How the Company Makes Money
Gap Inc. primarily makes money by selling branded apparel and accessories to consumers and wholesale partners. The core revenue stream is net sales of merchandise across its brand portfolio, generated through (1) direct-to-consumer sales, includin...
Gap Inc Earnings Call Summary
Earnings Call Date:May 28, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 20, 2026
Earnings Call Sentiment Neutral
The call highlighted meaningful progress across the portfolio — notably a strong rebound at Gap, category wins at Old Navy (denim/active/kids), solid capital returns, and upgraded EPS guidance — while also acknowledging clear near-term headwinds: Old Navy’s seasonal assortment miss and subsequent revenue moderation, a deeper-than-expected decline at Athleta, tariff-related margin dynamics, and short-term deleverage in SG&A and ROD. Management emphasized actions underway to address assortment and inventory issues, continued investments (beauty, loyalty, tech), and a balanced capital allocation approach. Overall the positives (brand momentum, cash position, strategic initiatives, and EPS outlook) are tempered by tangible operational challenges that management is actively addressing.Positive Updates
Company-level Comparable Sales Momentum
Comparable sales increased 2% in Q1, marking the 9th consecutive quarter of positive comps and building on prior-year momentum (2% comp growth in prior year).
Negative Updates
Old Navy Seasonal Assortment Shortfall and Near-term Weakness
Old Navy underperformed in seasonal women's dresses and other seasonal categories leading to weaker customer response; team actions improved trends beginning mid-May but management took a moderated view to FY revenue with Old Navy comps now expected flat to +1% for the year and Q2 comps projected down in the low single digits.
Read all updates
Q1-2026 Updates
Positive
Negative
Company-level Comparable Sales Momentum
Comparable sales increased 2% in Q1, marking the 9th consecutive quarter of positive comps and building on prior-year momentum (2% comp growth in prior year).
Read all positive updates
Company Guidance
Management updated fiscal 2026 guidance calling for full‑year net sales growth of 1–2% and raised adjusted EPS to $2.30–$2.40 (about +8–12% YoY) with an adjusted operating margin target of 7.3–7.5% (vs 7.3% last year); Old Navy comps are now expected to be flat to +1% for the year (Q2 comps down low single digits; Q2 net sales flat to −1%), Gap comps are expected in the single digits, Athleta is in a slower rebuild with Q2 similar to Q1, and Banana Republic is expected to post comp growth. They expect full‑year gross margin to be flat to slightly up with merchandise margin expansion but ~50 bps ROD deleverage for the year (Q2 gross margin roughly flat to −50 bps vs prior‑year 41.2% with ~80 bps ROD deleverage), adjusted SG&A roughly flat as a percent of sales (including $150m of cost savings), interest income ≈$25m, an effective tax rate ≈25%, and a weighted‑average share count of ≈375m (down ~2%); assumptions include ~$80m (≈50 bps) of tariff relief (weighted to Q2–Q3) with about half reserved for fuel and promotional flexibility. They forecast ~ $650m of FY capex (Q1 capex $135m), continue dividends at $0.175/quarter (Q1 dividends $63m), have repurchased $400m (~16m shares) YTD with ~$600m remaining authorization, and emphasize continued free cash flow generation and a cash balance of $2.6bn.Gap Inc Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
58
Neutral
Cash Flow
79
Positive
| Breakdown | TTM | Jan 2026 | Jan 2025 | Jan 2024 | Jan 2023 | Jan 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 15.40B | 15.37B | 15.09B | 14.89B | 15.62B | 16.67B |
| Gross Profit | 6.24B | 6.27B | 6.23B | 5.78B | 5.36B | 6.64B |
| EBITDA | 1.84B | 1.65B | 1.72B | 1.17B | 489.43M | 994.00M |
| Net Income | 962.00M | 816.00M | 844.00M | 502.00M | -202.00M | 256.00M |
Balance Sheet | ||||||
| Total Assets | 12.14B | 12.63B | 11.88B | 11.04B | 11.39B | 12.76B |
| Cash, Cash Equivalents and Short-Term Investments | 2.56B | 3.00B | 2.59B | 1.87B | 1.22B | 877.00M |
| Total Debt | 5.64B | 5.61B | 5.47B | 5.44B | 6.02B | 6.25B |
| Total Liabilities | 8.48B | 8.83B | 8.62B | 8.45B | 9.15B | 10.04B |
| Stockholders Equity | 3.65B | 3.80B | 3.26B | 2.60B | 2.23B | 2.72B |
Cash Flow | ||||||
| Free Cash Flow | 1.28B | 823.00M | 1.04B | 1.11B | -78.00M | 115.00M |
| Operating Cash Flow | 1.95B | 1.29B | 1.49B | 1.53B | 607.00M | 809.00M |
| Investing Cash Flow | -839.00M | -600.00M | -692.00M | -334.00M | -227.00M | -446.00M |
| Financing Cash Flow | -851.00M | -419.00M | -321.00M | -567.00M | 6.00M | -1.47B |
Gap Inc Technical Analysis
Negative
27.02
Price Trends
23.62
Negative
24.89
Negative
24.35
Negative
Market Momentum
-0.56
Negative
46.62
Neutral
50.10
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GAP, the sentiment is Negative. The current price of 27.02 is above the 20-day moving average (MA) of 21.94, above the 50-day MA of 23.62, and above the 200-day MA of 24.35, indicating a bearish trend. The MACD of -0.56 indicates Negative momentum. The RSI at 46.62 is Neutral, neither overbought nor oversold. The STOCH value of 50.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GAP.
Gap Inc Risk Analysis
Gap Inc disclosed 30 risk factors in its most recent earnings report. Gap Inc reported the most risks in the "Macro & Political" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Gap Inc Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $6.63B | 14.34 | 17.64% | ― | 11.23% | 8.96% | |
72 Outperform | $3.79B | 7.77 | 36.89% | ― | 5.13% | 0.95% | |
68 Neutral | $2.32B | 10.31 | 47.36% | 6.82% | 7.10% | 12.26% | |
67 Neutral | $7.87B | 8.34 | 26.47% | 2.45% | 1.58% | 11.13% | |
63 Neutral | $2.94B | 10.49 | 17.24% | 2.09% | 6.22% | 65.05% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
| ― | ― | ― | ― | ― | ― | ― |
* Consumer Cyclical Sector Average
GAP
Gap Inc
21.86
0.85
4.03%
ANF
Abercrombie Fitch
90.62
11.87
15.07%
AEO
American Eagle
18.29
8.54
87.55%
BKE
Buckle
45.10
4.92
12.24%
FL
Foot Locker
―
―
―
URBN
Urban Outfitters
77.38
8.21
11.87%
Gap Inc Corporate Events
Executive/Board ChangesShareholder Meetings
Gap Shareholders Back Board, Auditor and Executive Pay
Positive
May 15, 2026
Gap Inc. held its annual meeting of shareholders on May 12, 2026, with 342,882,129 of 365,340,191 eligible shares represented, establishing a quorum for voting. All board-nominated directors, including CEO Richard Dickson and members of the Fisher...
Business Operations and StrategyExecutive/Board Changes
Gap Updates Equity Award Agreements Under Long-Term Plan
Positive
Mar 12, 2026
On March 12, 2026, Gap Inc. adopted a suite of updated equity award agreements under its 2016 Long-Term Incentive Plan, including new forms for restricted stock units, deferred restricted stock units, performance shares, deferred performance share...
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Gap Highlights Strong 2025 Results, Boosts Capital Returns
Positive
Mar 5, 2026
Gap Inc. reported that for the fourth quarter and fiscal year ended Jan. 31, 2026, net sales rose 2% to $15.4 billion, marking a second consecutive year of topline growth and an eighth straight quarter of positive comparable sales. Operating incom...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.