Critical Analysis: GAP (GAP) & Its Rivals

GAP (NYSE:GAP) is one of 13 publicly-traded companies in the “Family clothing stores” industry, but how does it compare to its competitors? We will compare GAP to related businesses based on the strength of its valuation, profitability, earnings, institutional ownership, analyst recommendations, dividends and risk.

Dividends

GAP pays an annual dividend of $0.60 per share and has a dividend yield of 2.7%. 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 1.3% and pay out -178.5% of their earnings in the form of a dividend.

Profitability

This table compares GAP and its competitors’ 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	4.36%	-452.40%	7.85%

Risk and Volatility

GAP has a beta of 2.35, suggesting that its share price is 135% more volatile than the S&P 500. Comparatively, GAP’s competitors have a beta of 1.77, suggesting that their average share price is 77% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for GAP and its competitors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GAP	0	3	0	0	2.00
GAP Competitors	346	2105	2336	30	2.43

GAP presently has a consensus price target of $27.00, indicating a potential upside of 20.00%. As a group, “Family clothing stores” companies have a potential upside of 7.91%. Given GAP’s higher possible upside, equities analysts clearly believe GAP is more favorable than its competitors.

Insider and Institutional Ownership

58.8% of GAP shares are held by institutional investors. Comparatively, 75.6% of shares of all “Family clothing stores” companies are held by institutional investors. 31.0% of GAP shares are held by company insiders. Comparatively, 16.2% of shares of all “Family clothing stores” companies are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares GAP and its competitors gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
GAP	$15.17 billion	$502.00 million	-0.83
GAP Competitors	$12.51 billion	$774.80 million	12.60

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

Summary

GAP competitors beat GAP 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.