# The Gap (GAP.US)

Canonical: https://gigainvestors.com/s/GAP

Analysis as of: 2026-10-16T07:28:42.318Z. Financial observations: FY2003–FY2027.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: $23.46 per share; close as of 2026-10-15.

Estimated value: low $25.55 per share, central $28.22 per share, high $31.77 per share. Buy at or below the central value $28.22 per share. Valuation as of 2026-10-16T07:28:42.318Z; scenarios are not confidence intervals.

Expected annual return: 12.0% at the stated quote. About 12.0% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: fail

- 5 revenue declines in the last 10 years (informational)

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 5

- Years with a net loss: 2

- Operating margin variation: 1.00×

Chart: Operating margin; fiscal year observations.

- FY2018: 0.09×

- FY2019: 0.08×

- FY2020: 0.04×

- FY2021: -0.06×

- FY2022: 0.05×

- FY2023: -0.00×

- FY2024: 0.04×

- FY2025: 0.07×

- FY2026: 0.07×

- LTM to Jul 2026: 0.11×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: 10.7%

- ROIC, second-lowest year: -0.8%

- Typical minus recent gross margin: -2.6 pp

- Typical gross margin (annual median): 38.2%

- Recent gross margin (lower of latest and 3-year median): 40.8%

- Years with nonpositive capital: 0

- Capital spending / revenue: 3.8%

- ROIC including acquisitions, ten-year median: 10.9%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 33.9%

- FY2018: 38.4%

- FY2019: 31.1%

- FY2020: 4.1%

- FY2021: -8.8%

- FY2022: 8.1%

- FY2023: -0.8%

- FY2024: 8.5%

- FY2025: 13.9%

- FY2026: 13.0%

### economics: fail

- incremental invested capital return below threshold

- Owner earnings / net income, 5-yr: 1.02×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $2.3B

- Net income, five-year total: $2.2B

- Return on incremental invested capital: -27.9%

- Working capital / revenue, annual change: -0.0 pp

- Working capital / revenue, change between three-year averages: -0.7 pp

- Working capital / revenue, final three-year average: 6.3%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: 1.00×

- FY2023: 1.72×

- FY2024: 1.20×

- FY2025: 1.06×

- FY2026: 1.03×

### management: fail

- Historical market-dollar context (not the management verdict): 2017 to 2026 (9 years)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 33.9% vs 13.0%

- Per-share earnings: 2.19 to 2.13 (three-year endpoint medians)

- per-share value declined or ends nonpositive

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -0.4%

- Ordinary dilution, 5-year annual growth: 0.5%

- Market cap gain: $1.4B

- Cumulative retained earnings: $859M

- Diluted shares, 10-year annual growth: -0.4%

- Diluted shares, 5-year annual growth: 0.5%

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value growth: -0.4%

- Per-share value change: -$0.07

- Per-share value, starting three-year median: $2.19

- Per-share value, ending three-year median: $2.13

- Buybacks concentrated in cheaper years (correlation): 0.13

- Average buyback yield: 1.8%

- Buyback history: 10 years

- Debt-funded buybacks: No

- Acquisition spending: $161M

- Cumulative net income, 10 years: $4.4B

- ROIC, first three-year median: 33.9%

- ROIC, last three-year median: 13.0%

Chart: Earnings per share; fiscal year observations.

- FY2017: $1.72

- FY2018: $2.19

- FY2019: $2.67

- FY2020: $0.92

- FY2021: -$1.78

- FY2022: $0.67

- FY2023: -$0.55

- FY2024: $1.34

- FY2025: $2.20

- FY2026: $2.13

### accounting: pass

- Sloan accruals: -3.8%

- Receivables to sales index (DSRI): 0.95×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 12.5%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.58×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.07×

Chart: Sloan accruals; fiscal year observations.

- FY2017: -13.7%

- FY2018: -6.7%

- FY2019: -4.7%

- FY2020: -7.7%

- FY2021: -6.6%

- FY2022: -4.3%

- FY2023: -7.1%

- FY2024: -9.3%

- FY2025: -5.4%

- FY2026: -3.8%

## Holders

## Price story

Price needs cash profits to shrink 2.2% a year for ten years · "Gap Inc. (GAP) Raises Its Outlook Even As Old Navy Stumbles" (finance.yahoo.com, Sep 2026) · sales -0.3%

Story as of 2026-10-16T09:58:48.132Z; price observation 2026-10-15.

Price needs cash profits to shrink 2.2% a year for ten years

- 2025-08-28: Gap forecasts weaker annual margin growth amid tariff concerns, shares fall ([ca.finance.yahoo.com](https://ca.finance.yahoo.com/news/gap-forecasts-weaker-annual-margin-202030063.html))

- 2025-11-21: Gap beats Q3 earnings estimates, raises full-year guidance ([finance.yahoo.com](https://finance.yahoo.com/video/gap-beats-q3-earnings-estimates-144919928.html))

- 2026-03-06: Gap shares fall on earnings miss despite continued sales growth ([finance.yahoo.com](https://finance.yahoo.com/news/gap-shares-fall-earnings-miss-152600025.html))

- 2026-05-28: Gap (NYSE:GAP) Reports Sales Below Analyst Estimates In Q1 CY2026 Earnings, Stock Drops 14.4% ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/gap-nyse-gap-reports-sales-204514388.html))

- 2026-08-28: Gap Stock Jumps After Strong Earnings, Upbeat Guidance and a New Old Navy CEO ([finance.yahoo.com](https://finance.yahoo.com/m/727b65ea-5166-3092-9416-0a2953aa5b8b/gap-stock-jumps-after-strong.html))

- 2026-09-01: Gap Inc. (GAP) Raises Its Outlook Even As Old Navy Stumbles ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/gap-inc-gap-raises-outlook-073906168.html))

### Sales · FY2026–2027

sales -0.3%; source https://www.sec.gov/Archives/edgar/data/39911/000162828026018573/gap-20260131.htm; observed 2026-03-17.

- FY2018: $16B 

- FY2019: $17B 

- FY2020: $16B 

- FY2021: $14B 

- FY2022: $17B 

- FY2023: $16B 

- FY2024: $15B 

- FY2025: $15B 

- FY2026: $15B 

- FY2027: $15B 

### Gross margin · FY2026

gross margin 40.8%; source https://www.sec.gov/Archives/edgar/data/39911/000162828026018573/gap-20260131.htm; observed 2026-03-17.

- FY2017: 36.3% 

- FY2018: 38.3% 

- FY2019: 38.1% 

- FY2020: 37.4% 

- FY2021: 34.1% 

- FY2022: 39.8% 

- FY2023: 34.3% 

- FY2024: 38.8% 

- FY2025: 41.3% 

- FY2026: 40.8% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in apparel retail; annual sales are USD 15.4 billion.

- Source: https://www.sec.gov/Archives/edgar/data/39911/000162828026018573/gap-20260131.htm (filed 2026-03-17); FY2026: revenue 15366000000; grossProfit 6268000000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); GAP.US: The Gap, Inc. operates as an apparel retail company in the United States, Canada, Japan, Taiwan, and internationally. The company offers apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, and Athleta brands. The company offers its products through company-operated stores, franchise stores, websites, and third-party arrangements, as well as licensing partnerships. It has franchise agreements to operate Old Navy, Gap, Banana Republic, and Athleta in Asia, Europe, Latin America, the Middle East, and Africa. The Gap, Inc. was incorporated in 1969 and is headquartered in San Francisco, California.

### Why customers stay

Margins ranged from 38.8% to 41.3% during 2024–26; it earns 10.7% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-03-17); FY2024: grossProfit / revenue = 38.8%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-03-17); FY2025: grossProfit / revenue = 41.3%.

- Source: https://www.sec.gov/Archives/edgar/data/39911/000162828026018573/gap-20260131.htm (filed 2026-03-17); FY2026: grossProfit / revenue = 40.8%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-03-17); 10-year return on capital observations [[2017,0.33894483362521893],[2018,0.3843862455017993],[2019,0.3108748368351202],[2020,0.04134122919334187],[2021,-0.08763093552953288],[2022,0.08137678085290999],[2023,-0.00797979797979798],[2024,0.08489112001198235],[2025,0.1388698506494506],[2026,0.12957368741558428]]; median 0.10723240371378331. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Paid dividends in 9 of 10 years; bought back USD 155 million of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-03-17); FY2017: growth capex 0; upkeep 524000000; owner earnings 745000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-03-17); FY2018: growth capex 58677535.97359264; upkeep 672322464.0264074; owner earnings 734677535.9735926. Growth capex / owner earnings = 0.07986842267585238.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-03-17); FY2019: growth capex 126191837.03936958; upkeep 578808162.9606304; owner earnings 1002191837.0393696. Growth capex / owner earnings = 0.125915850015462.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-03-17); FY2022: growth capex 190000000; upkeep 504000000; owner earnings 256000000. Growth capex / owner earnings = 0.7421875.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-03-17); FY2024: growth capex 0; upkeep 420000000; owner earnings 604000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-03-17); FY2025: growth capex 0; upkeep 447000000; owner earnings 897000000. Growth capex / owner earnings = 0.

- Source: https://www.sec.gov/Archives/edgar/data/39911/000162828026018573/gap-20260131.htm (filed 2026-03-17); FY2026: growth capex 0; upkeep 470000000; owner earnings 842000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-03-17); Dividend observations: [[2017,367000000],[2018,361000000],[2019,373000000],[2020,364000000],[2021,0],[2022,226000000],[2023,220000000],[2024,222000000],[2025,225000000],[2026,247000000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/39911/000162828026018573/gap-20260131.htm (filed 2026-03-17); FY2026: cash repurchases 155000000 USD.

### Are managers owners

Insiders own 36% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); GAP.US SharesStats.PercentInsiders = 35.987 percentage points; cache date 2026-10-16.

### What the price says

The price assumes cash profits shrink 2.2% yearly over ten years; actual growth was 2%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-03-17); Ten-year compound average after fade. Initial solved rate -0.04316388621173445. Price 23.46; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2016 owner earnings/share 1.8025 → FY2026 2.1927083333333335. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $27.59 per share

- 2016-11: $24.97 per share

- 2016-12: $22.44 per share

- 2017-01: $23.03 per share

- 2017-02: $24.82 per share

- 2017-03: $24.29 per share

- 2017-04: $26.20 per share

- 2017-05: $22.50 per share

- 2017-06: $21.99 per share

- 2017-07: $23.83 per share

- 2017-08: $23.62 per share

- 2017-09: $29.53 per share

- 2017-10: $25.99 per share

- 2017-11: $32.31 per share

- 2017-12: $34.06 per share

- 2018-01: $33.24 per share

- 2018-02: $31.58 per share

- 2018-03: $31.20 per share

- 2018-04: $29.24 per share

- 2018-05: $27.98 per share

- 2018-06: $32.39 per share

- 2018-07: $30.17 per share

- 2018-08: $30.35 per share

- 2018-09: $28.85 per share

- 2018-10: $27.30 per share

- 2018-11: $27.29 per share

- 2018-12: $25.76 per share

- 2019-01: $25.44 per share

- 2019-02: $25.40 per share

- 2019-03: $26.18 per share

- 2019-04: $26.08 per share

- 2019-05: $18.68 per share

- 2019-06: $17.97 per share

- 2019-07: $19.50 per share

- 2019-08: $15.79 per share

- 2019-09: $17.36 per share

- 2019-10: $16.26 per share

- 2019-11: $16.61 per share

- 2019-12: $17.68 per share

- 2020-01: $17.41 per share

- 2020-02: $14.33 per share

- 2020-03: $7.04 per share

- 2020-04: $8.12 per share

- 2020-05: $8.90 per share

- 2020-06: $12.62 per share

- 2020-07: $13.37 per share

- 2020-08: $17.39 per share

- 2020-09: $17.03 per share

- 2020-10: $19.45 per share

- 2020-11: $20.96 per share

- 2020-12: $20.19 per share

- 2021-01: $20.25 per share

- 2021-02: $24.95 per share

- 2021-03: $29.78 per share

- 2021-04: $33.10 per share

- 2021-05: $33.45 per share

- 2021-06: $33.65 per share

- 2021-07: $29.17 per share

- 2021-08: $26.73 per share

- 2021-09: $22.70 per share

- 2021-10: $22.69 per share

- 2021-11: $16.53 per share

- 2021-12: $17.65 per share

- 2022-01: $18.07 per share

- 2022-02: $14.55 per share

- 2022-03: $14.08 per share

- 2022-04: $12.42 per share

- 2022-05: $11.03 per share

- 2022-06: $8.24 per share

- 2022-07: $9.62 per share

- 2022-08: $9.14 per share

- 2022-09: $8.21 per share

- 2022-10: $11.27 per share

- 2022-11: $14.54 per share

- 2022-12: $11.28 per share

- 2023-01: $13.57 per share

- 2023-02: $13.01 per share

- 2023-03: $10.04 per share

- 2023-04: $9.60 per share

- 2023-05: $8.02 per share

- 2023-06: $8.93 per share

- 2023-07: $10.30 per share

- 2023-08: $11.58 per share

- 2023-09: $10.63 per share

- 2023-10: $12.80 per share

- 2023-11: $20.07 per share

- 2023-12: $20.91 per share

- 2024-01: $18.69 per share

- 2024-02: $18.94 per share

- 2024-03: $27.55 per share

- 2024-04: $20.52 per share

- 2024-05: $28.96 per share

- 2024-06: $23.89 per share

- 2024-07: $23.48 per share

- 2024-08: $22.43 per share

- 2024-09: $22.05 per share

- 2024-10: $20.77 per share

- 2024-11: $24.25 per share

- 2024-12: $23.63 per share

- 2025-01: $24.07 per share

- 2025-02: $22.61 per share

- 2025-03: $20.61 per share

- 2025-04: $21.90 per share

- 2025-05: $22.31 per share

- 2025-06: $21.81 per share

- 2025-07: $19.46 per share

- 2025-08: $22.01 per share

- 2025-09: $21.39 per share

- 2025-10: $22.85 per share

- 2025-11: $27.07 per share

- 2025-12: $25.60 per share

- 2026-01: $27.98 per share

- 2026-02: $28.04 per share

- 2026-03: $24.20 per share

- 2026-04: $24.59 per share

- 2026-05: $21.15 per share

- 2026-06: $18.68 per share

- 2026-07: $20.09 per share

- 2026-08: $22.31 per share

- 2026-09: $22.84 per share

- 2026-10: $23.46 per share

## Annual estimated value (USD per share)

- FY2017: low $32.66 per share, central $36.63 per share, high $41.92 per share

- FY2018: low $26.22 per share, central $29.35 per share, high $33.53 per share

- FY2019: low $25.90 per share, central $29.09 per share, high $33.34 per share

- FY2020: low $25.33 per share, central $28.34 per share, high $32.34 per share

- FY2021: low $24.36 per share, central $26.94 per share, high $30.37 per share

- FY2022: low $8.73 per share, central $9.73 per share, high $11.07 per share

- FY2025: low $12.55 per share, central $13.46 per share, high $14.67 per share

- FY2026: low $24.76 per share, central $27.21 per share, high $30.46 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/39911/000162828026018573/gap-20260131.htm); period 2026-01-31, filed 2026-03-17.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.