Financial Review: GAP (GAP) vs. The Competition

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

Insider & Institutional Ownership

58.8% of GAP shares are owned by institutional investors. Comparatively, 71.3% of shares of all “Family clothing stores” companies are owned by institutional investors. 31.0% of GAP shares are owned by company insiders. Comparatively, 14.5% of shares of all “Family clothing stores” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent recommendations and price targets for GAP and its rivals, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GAP	0	3	0	0	2.00
GAP Competitors	357	2125	2351	30	2.42

GAP presently has a consensus price target of $27.00, indicating a potential upside of 24.94%. As a group, “Family clothing stores” companies have a potential upside of 14.81%. Given GAP’s higher probable upside, analysts clearly believe GAP is more favorable than its rivals.

Dividends

GAP pays an annual dividend of $0.60 per share and has a dividend yield of 2.8%. GAP pays out 29.7% of its earnings in the form of a dividend. As a group, “Family clothing stores” companies pay a dividend yield of 1.8% and pay out 78.7% of their earnings in the form of a dividend. GAP is clearly a better dividend stock than its rivals, given its higher yield and lower payout ratio.

Volatility & Risk

GAP has a beta of 2.35, indicating that its stock price is 135% more volatile than the S&P 500. Comparatively, GAP’s rivals have a beta of 2.24, indicating that their average stock price is 124% more volatile than the S&P 500.

Valuation & Earnings

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

	Gross Revenue	Net Income	Price/Earnings Ratio
GAP	$14.89 billion	$502.00 million	10.70
GAP Competitors	$11.62 billion	$692.49 million	11.60

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

Profitability

This table compares GAP and its rivals’ 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	3.12%	-411.36%	7.11%

Summary

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

About GAP

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.