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Gap Inc
(NYSE:GAP)
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Rating:69Neutral
Price Target:
$24.50
▲(21.59% Upside)
Action:Downgraded
Date:09/16/26
The score is driven primarily by improved profitability and positive cash generation, supported by an attractive valuation (low P/E and solid dividend yield). Offsetting factors are the sharp TTM revenue contraction and still-elevated leverage, while technical signals suggest stabilization rather than strong upward momentum; earnings-call guidance is constructive on margins/EPS but tempered by mixed brand-level demand.
Positive Factors
Gap brand momentum
Sustained positive comparable sales and market-share gains indicate improving customer demand and stronger brand relevance. Growth in denim, fleece, and kids categories, alongside lower discounting and higher average unit retail, supports more durable revenue and merchandise-margin performance.
Negative Factors
Weak overall demand
The sharp trailing revenue contraction and modest forward outlook raise concerns about the durability of recent profit gains. If sales remain pressured, fixed store and operating costs may be harder to absorb, limiting scale benefits and reducing confidence in sustained earnings growth.
Read all positive and negative factors
Positive Factors
Negative Factors
Gap brand momentum
Sustained positive comparable sales and market-share gains indicate improving customer demand and stronger brand relevance. Growth in denim, fleece, and kids categories, alongside lower discounting and higher average unit retail, supports more durable revenue and merchandise-margin performance.
Read all positive factors
Gap Inc (GAP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.84B
Dividend Yield3.09%
Average Volume (3M)5.56M
Price to Earnings (P/E)6.5
Beta (1Y)1.05
Revenue Growth1.05%
EPS Growth44.82%
CountryUS
Employees79,000
SectorConsumer Cyclical
Sector Strength84
IndustryApparel - Retail
Share Statistics
EPS (TTM)3.42
Shares Outstanding351,270,140
10 Day Avg. Volume4,859,595
30 Day Avg. Volume5,556,847
Financial Highlights & Ratios
PEG Ratio-4.79
Price to Book (P/B)2.75
Price to Sales (P/S)0.68
P/FCF Ratio12.68
Enterprise Value/Market Cap1.34
Enterprise Value/Revenue0.69
Enterprise Value/Gross Profit1.58
Enterprise Value/Ebitda5.90
Forecast
1Y Price Target
$26.21Price Target Upside30.06% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering16
EPS Forecast (FY)2.39
Revenue Forecast (FY)$15.54B
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 apparel and accessories through an omnichannel retail model. Its main revenue stream is net sales of merchandise across its brand portfolio, generated through (1) company-operated physical stores (transact...
Gap Inc Earnings Call Summary
Earnings Call Date:Aug 27, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 19, 2026
Earnings Call Sentiment Positive
The call conveyed a cautiously optimistic tone: strong operational and margin performance (led by Gap and Banana Republic), disciplined capital allocation and an improved full-year EPS and margin outlook are offset by notable top-line weakness at Old Navy and Athleta, a modest overall revenue contraction in the quarter and some expense/leverage pressures. Management outlined concrete corrective actions for underperforming brands and reported early signs of improvement at Old Navy, supporting confidence in the second half.Positive Updates
Gap Brand Momentum
Gap delivered another excellent quarter with comparable sales up 10% (11th consecutive quarter of positive comps) and net sales up 9%. Destination categories (denim, fleece, kids & baby) drove growth, market share gains continued, customer file expansion and lower discounting supported higher AURs, and store remodel program on track (~35 remodels this year, ~1/4 of North America specialty fleet by year-end).
Negative Updates
Old Navy Comparable Sales Decline and Traffic Shortfall
Old Navy comparable sales declined 4% (net sales down 4%). About ~3 percentage points of comp pressure attributed to women's summer seasonal assortment (dresses, shorts, swim) and execution/marketing missteps led to a slowdown in traffic and a modest miss vs expectations. Full-year Old Navy comp outlook now flat to down 1% with sequential improvement expected in H2.
Read all updates
Q2-2026 Updates
Positive
Negative
Gap Brand Momentum
Gap delivered another excellent quarter with comparable sales up 10% (11th consecutive quarter of positive comps) and net sales up 9%. Destination categories (denim, fleece, kids & baby) drove growth, market share gains continued, customer file expansion and lower discounting supported higher AURs, and store remodel program on track (~35 remodels this year, ~1/4 of North America specialty fleet by year-end).
Read all positive updates
Company Guidance
The company narrowed its fiscal 2026 revenue outlook to net sales growth of 1.0%–1.5% (comps roughly in line) while raising profitability targets: adjusted gross margin now expected to be up slightly year‑over‑year, adjusted operating margin 7.4%–7.6% (vs 7.3% last year) and adjusted EPS $2.35–$2.45 (up 10%–15%), with adjusted interest income ~ $20M (skewed to Q4) and an expected tax rate of 25%–26%. By brand, full‑year comps are guided to Old Navy flat to down 1%, Gap high‑single to low‑double digit growth, Banana Republic low single digits and Athleta roughly in line with its challenged first half. Third quarter guidance: net sales +1.5%–2.5% (comps ~50 bps below net sales), Q3 gross margin +25–75 bps vs last year’s 42.4% (with ~150 bps tariff benefit, ~60 bps ROD deleverage); full‑year ROD deleverage ~50 bps. Other metrics: ~$650M capex, $150M targeted cost savings, $600M repurchased YTD (26M shares) with ~$400M remaining, weighted average shares ~367M, cash ~$2.5B, YTD operating cash $550M and free cash flow $261M.Gap Inc Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
58
Neutral
Cash Flow
63
Positive
| Breakdown | TTM | Jan 2026 | Jan 2025 | Jan 2024 | Jan 2023 | Jan 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 15.33B | 15.37B | 15.09B | 14.89B | 15.62B | 16.67B |
| Gross Profit | 6.63B | 6.27B | 6.23B | 5.78B | 5.36B | 6.64B |
| EBITDA | 1.78B | 1.65B | 1.72B | 1.17B | 489.43M | 994.00M |
| Net Income | 1.25B | 816.00M | 844.00M | 502.00M | -202.00M | 256.00M |
Balance Sheet | ||||||
| Total Assets | 12.86B | 12.63B | 11.88B | 11.04B | 11.39B | 12.76B |
| Cash, Cash Equivalents and Short-Term Investments | 2.48B | 3.00B | 2.59B | 1.87B | 1.22B | 877.00M |
| Total Debt | 5.72B | 5.61B | 5.47B | 5.44B | 6.02B | 6.25B |
| Total Liabilities | 8.90B | 8.83B | 8.62B | 8.45B | 9.15B | 10.04B |
| Stockholders Equity | 3.95B | 3.80B | 3.26B | 2.60B | 2.23B | 2.72B |
Cash Flow | ||||||
| Free Cash Flow | 1.11B | 823.00M | 1.04B | 1.11B | -78.00M | 115.00M |
| Operating Cash Flow | 1.83B | 1.29B | 1.49B | 1.53B | 607.00M | 809.00M |
| Investing Cash Flow | -884.00M | -600.00M | -692.00M | -334.00M | -227.00M | -446.00M |
| Financing Cash Flow | -970.00M | -419.00M | -321.00M | -567.00M | 6.00M | -1.47B |
Gap Inc Technical Analysis
Neutral
20.15
Price Trends
22.02
Positive
20.99
Positive
22.79
Negative
Market Momentum
0.07
Positive
48.74
Neutral
38.14
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GAP, the sentiment is Neutral. The current price of 20.15 is below the 20-day moving average (MA) of 22.90, below the 50-day MA of 22.02, and below the 200-day MA of 22.79, indicating a neutral trend. The MACD of 0.07 indicates Positive momentum. The RSI at 48.74 is Neutral, neither overbought nor oversold. The STOCH value of 38.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 |
|---|---|---|---|---|---|---|---|
81 Outperform | $6.98B | 13.85 | 39.59% | 6.86% | 4.73% | 8.69% | |
79 Outperform | $7.77B | 13.96 | 20.72% | ― | 11.01% | 24.97% | |
73 Outperform | $7.71B | 21.86 | 45.94% | ― | 10.35% | 146.52% | |
72 Outperform | $3.29B | 9.81 | 20.04% | 2.55% | 8.21% | 89.24% | |
69 Neutral | $7.84B | 6.53 | 33.13% | 3.09% | 1.05% | 44.82% | |
69 Neutral | $2.39B | 10.59 | 46.91% | 9.49% | 6.22% | 8.74% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% |
* Consumer Cyclical Sector Average
GAP
Gap Inc
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0.82%
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Gap Inc Corporate Events
Business Operations and StrategyExecutive/Board Changes
Gap Inc Adds Veteran Consumer Investor to Board
Positive
Sep 15, 2026
On September 15, 2026, Gap Inc. appointed Kirsten Green, founder and managing partner of venture capital firm Forerunner, to its board of directors, effective the same day. Green will receive stock units valued at $185,000 and a pro rata portion o...
Business Operations and StrategyExecutive/Board ChangesStock BuybackDividendsFinancial Disclosures
Gap Inc Updates Outlook Amid Strong Margin Performance
Positive
Aug 27, 2026
On August 27, 2026, Gap Inc. reported second-quarter fiscal 2026 results for the period ended August 1, 2026, showing net sales of $3.7 billion, down 2% year on year, and comparable sales down 1%. Despite softer top-line performance, the company d...
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.