The Gap, Inc. operates as an apparel retail company worldwide. It offers apparel, accessories, and personal care products for men, women, and children under the Gap, Banana Republic, Old Navy, Athleta, and Intermix brands. The company was founded in 1969 and is based in San Francisco, California.
GPS Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for GPS, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Gap Inc ranked in the 59th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 129.33% on a DCF basis. In terms of the factors that were most noteworthy in this DCF analysis for GPS, they are:
Its compound free cash flow growth rate, as measured over the past 5.53 years, is -0.13% -- higher than just 14.29% of stocks in our DCF forecasting set.
22% of the company's capital comes from equity, which is greater than just 13.33% of stocks in our cash flow based forecasting set.
The weighted average cost of capital for the company is 5. This value is greater than only 2.95% stocks in the Consumer Cyclical sector that generate free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
PKG, LOCO, MDP, BWA, and ADNT can be thought of as valuation peers to GPS, in the sense that they are in the Consumer Cyclical sector and have a similar price forecast based on DCF valuation.