Critical Survey: GAP (GAP) and The Competition

GAP (NYSE:GAP) is one of 14 public companies in the “Family clothing stores” industry, but how does it compare to its peers? We will compare GAP to related businesses based on the strength of its institutional ownership, dividends, valuation, earnings, analyst recommendations, profitability and risk.

Volatility & Risk

GAP has a beta of 2.35, indicating that its share price is 135% more volatile than the S&P 500. Comparatively, GAP’s peers have a beta of 2.28, indicating that their average share price is 128% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for GAP and its peers, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GAP	0	3	0	0	2.00
GAP Competitors	356	1994	1913	25	2.37

GAP currently has a consensus target price of $27.00, indicating a potential upside of 30.37%. As a group, “Family clothing stores” companies have a potential upside of 16.00%. Given GAP’s higher possible upside, equities research analysts clearly believe GAP is more favorable than its peers.

Dividends

GAP pays an annual dividend of $0.60 per share and has a dividend yield of 2.9%. GAP pays out -2.2% of its earnings in the form of a dividend. As a group, “Family clothing stores” companies pay a dividend yield of 2.0% and pay out -37.6% of their earnings in the form of a dividend.

Profitability

This table compares GAP and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GAP	5.05%	28.89%	6.92%
GAP Competitors	2.63%	-416.10%	6.12%

Insider & Institutional Ownership

70.7% of shares of all “Family clothing stores” companies are owned by institutional investors. 14.0% of shares of all “Family clothing stores” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares GAP and its peers revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
GAP	$15.17 billion	$502.00 million	-0.76
GAP Competitors	$6.56 billion	$288.29 million	8.62

GAP has higher revenue and earnings than its peers. GAP is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Summary

GAP beats its peers on 8 of the 15 factors compared.

GAP Company Profile

The Gap, Inc. operates as an apparel retail company. The company offers apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, and Athleta brands. Its products include adult apparel and accessories; and fitness and lifestyle products for use in yoga, training, sports, travel, and everyday activities for women and girls. The company offers its products through company-operated stores, franchise stores, websites, and third-party arrangements. It has franchise agreements to operate Old Navy, Gap, Banana Republic, and Athleta stores and websites in Asia, Europe, Latin America, the Middle East, and Africa. The Gap, Inc. was incorporated in 1969 and is headquartered in San Francisco, California.