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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
The Gap, Inc. (XNYS:GPS) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
GPS
Name:
THE GAP, INC. (XNYS:GPS)
Sector:
- 327000.00K
Industry:
Apparel Retail
CEO:
Mr. Mark Breitbard
Total Employees:
97,000
Our Technological Advancement Rating
Our Rating:
A
Technological advancement compared to industry is 63.05% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF THE GAP, INC.(GPS) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND APPAREL RETAIL INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
9.27
One Month Price Target:
$9.36
Six Month Price Target :
$9.8
Likely Price in One Year's Time:
Ticker:
$10.33
Likely Trading Range Today Under (Normal Volatility)
$9.2
Price Upper limit ($) :
$9.34
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$8.41
This week:
$7.35
This month :
$5.42
Other Primary facts
Market Cap:
3.32B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
363.70M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
29.46%
-24.12%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$13.26
$11.44
$5.28
$7.10
Medium risk (<10%) entry points
Buy Call
Sell Call
$10.85
Buy Put:
Sell Put:
$10.46
$7.68
$8.08
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
GPS
Sharpe Ratio:
0.28%
Comparison:
GPS, is amongst the top 40% stocks with lowest risk-adjusted returns
Sharpe ratio is -59.03% lower than the industry
& is -87.54% lower than the market/S&P 500 average
Average Returns/Yield of
GPS
Daily returns:
0.02%
Weekly returns:
0.11%
Monthly returns:
0.43%
Yearly returns:
8.86%
Comparison of returns:
Average annual returns/yield (last 3 years) is -41.21% below industry average
Classification:
GPS, is amongst the top 60% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.68
Statistical test of Returns:
GPS has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
4.53%
Weekly Volatility:
10.13%
Monthly Volatility:
20.25%
Yearly Volatility:
70.15%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
3.38%
Volatility in last five trading days has been -25.33% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-9.28%
Weekly VaR:
-20.75%
Monthly VaR:
-41.49%
How Much Can the price of
GPS
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-36%
Worst case (decline):
>85%
This translates to price declining to:
$5.89
This translates to price declining to:
$1.39
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
GPS is a 192.85% riskier investment compared to the market/S&P 500 & is 150.89% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 16.69% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
GPS
Beta in relation to market/S&P 500--1.71
Expected beta in 1 year's time:
1.249
Expected beta in 3 year's time:
1.766
Unlevered (debt free) Beta:
0.269
Beta in relation to Nasdaq (XNAS):
1.099
Beta in relation to all global stocks::
0.943
Beta Comparison & Analysis
Beta of competitors/peers::
1.74
Beta is -1.95% lower than peers
Average Industry Beta:
1.366
Beta is 24.84% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
9.91%
Sustainable growth rate is -75.74% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.096
Alpha is 163.93% above industry average alpha yield
Alpha is -613% below the market average
Analysis of Cost of Capital of
GPS
Equity cost of capital:
0.148
Equity cost of capital is 18.59% above industry mean WACC
Unlevered (without debt) cost of capital:
2.34%
Before-tax cost of debt:
1.54%
After-tax cost of debt:
1.22%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.22%
WACC is 6.87% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$44.42
Revenue growth rate per share of (3Y):
1.2
Annual revenue growth rate is -198.01% below industry average
EPS:
-$0.22
Expected Annual growth rate of EPS (3Y):
-38.07%
Expected future EPS growth rate is -281.53% lower than the Apparel Retail industry
Free cash flow (FCF) per share:
-
Balance sheet equity growth per share: -100.00%
Equity growth rate per share is 249.58% higher than the industry
Debt per share
$18.33
EBITDA per share
$1.44
Valuation Analysis Today of
GPS
P/E Ratio:
18.41
P/E Ratio of Competitors/Peers:
21.87
P/E ratio is -15.85% lower than main peers & is 33.89% higher than the industry
-
GPS is -406.52% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $7.23
Present value of the expected future dividends only: $2.66
P/S (Price to Sales ratio):
0.21
Price to sales ratio is -75.93% below the industry mean
P/B (Price to book value ratio):
1.2
-
-
Net income growth rate (3Y):
-182.40%
Net income growth rate is 194.39% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: -62.50%
Dividend yeild: 5.50%
Previous Dividend: $0.15
Previous adjusted dividend: $0.15
Previous Dividend: $0.51
Expected next dividend best case: $0.22
Expected next dividend worst case: $0.08
Average dividend payment (long-term): $0.19
Average dividend increase/decrease (growth rate) % per period: -3.65%
Expected next dividend payment date: 26/07/2022
Expected next dividend record date: 07/05/2022
Expected next dividend declaration date: 25/05/2022
Previous dividend payment date: 27/04/2022
Previous dividend record date: 04/06/2022
Previous dividend declaration date: 24/02/2022
Dividend History:
2022-04-05--$0.15
2021-10-05--$0.12
2021-04-06--$0.24
2022-01-04--$0.12
2021-07-06--$0.12
2020-04-07--$0.24
Dividend growth rate is -89.32% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
237.60%
Net debt to equity ratio:
192.41%
Debt to assets ratio:
49.01%
Net debt to assets ratio:
39.69%
Debt-to-asset ratio is -23.87% below industry average
Ability to repay debt:
Interest coverage ratio:
4.57
Interest coverage ratio is -97.99% less than industry average
Looking forward:
Debt growth rate:
253.34%
Annual debt growth is -4% lower than industry average debt growth rate
Debt repayment rate in last quarter: 27.63%
Analysis of Key Statistics
Correlation of price movement with the market:
0.542
Statistical significance of correlation:
GPS has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.453
Stock price is 19.72% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.453
Correlation of price movement with Nasdaq (^IXIC):
-0.022
Covariance of price movement with the market:
-0.057
Kurtosis
6.404
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.2
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
GPS
Gross Profit Margin Ratio:
151%
Operating Profit Margin Ratio:
2.31%
Operating profit margin is -68.88% lower than the industry
Net Profit Margin Ratio:
151%
Effective Tax Rate:
-125.00%
Effective tax rate is -574.10% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
-2.57%
Return on equity (ROE) is -106.20% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
-0.53%
Return on assets (ROA) is -105.06% lower than the industry
Financial Leverage:
2.0x
Current Ratio:
1.65
Current ratio is -5.33% below industry average
Cash Conversion Cycle (days):
-43.9
Cash conversion cycle is -191.78% below industry average
The remaining useful life of property plant & equipment is: 9.7 years
Stock based compensation to net income ratio:
-34.72%
In-depth Efficiency Analysis
Revenue generated per employee:
166.6K
Each employee generates -58% less revenue than industry average revenue per employee
EBITDA generated per employee:
5.4K
Each employee generates -89% less EBITDA than industry average revenue per employee
Profit generated per employee:
- 0.7K
Each employee generates -103% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 3.4K
Each employee generates -151% less free cash flow than industry average revenue per employee
Assets/Capital per employee
78.4K
Each employee generates -151% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
GPS
KOHL'S CORPORATION (XNYS:KSS)
Polaris Inc. (XNYS:PII)
HILTON GRAND VACATIONS INC. (XNYS:HGV)
BOYD GAMING CORPORATION (XNYS:BYD)
SKECHERS U.S.A., INC. (XNYS:SKX)
MARRIOTT VACATIONS WORLDWIDE CORPORATION (XNYS:VAC)
ARENA MINERALS INC. (XTSX:AN)
HARLEY-DAVIDSON, INC. (XNYS:HOG)
GRAPHIC PACKAGING HOLDING COMPANY (XNYS:GPK)
Current Analyst Ratings
Strong buy�13%
Buy�8%
Hold�79%
Sell�13%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
4/30/22
Revenue:
16.16B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
10.05B
6.10B
-
-
-
-
5.73B
5.73B
- 2000.00K
115.00M
382.00M
525.00M
373.00M
- 72000.00K
- 80000.00K
100.00M
- 72000.00K
Statement of Cash Flow
Date:
Period:
128.00M
Differed Income Tax :
- 56000.00K
Stock Based Compensation :
25.00M
Change in Working Capital :
- 390000.00K
Accounts Receivables:
-
Other Working Capital:
- 34000.00K
Other Non-Cash Items:
335.00M
Net Cash Provided by Operating Activities:
- 110000.00K
Investments in PP&E:
- 217000.00K
Net Acquisitions:
- 135000.00K
Purchases of Investments:
- 207000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
5/1/21
2022
Q1
2.07B
475.00M
2.54B
-
2.37B
1.09B
6.00B
6.90B
-
-
-
-
703.00M
7.60B
-
13.60B
1.53B
798.00M
16.00M
-
1.31B
3.64B
6.67B
493.00M
7.16B
-
10.80B
19.00M
2.67B
2.0M
118.00M
October 30, 2021 at 12:00:00 AM
15.78B
2.81B
13.60B
-
7.47B
5.4B
268.00M
-
- 291000.00K
- 2546000.00K
-
- 73000.00K
- 45000.00K
1.49B
- 1175000.00K
- 2000.00K
- 1578000.00K
829.00M
2.41B
- 110000.00K
- 217000.00K
- 327000.00K
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
GPS
2023
2024
2025
2026
2027
$7.67
$8.55
$9.53
$10.62
$11.84