Start here if you're new
what it is
Gap sells private-label clothes through Old Navy, Gap, Banana Republic, and Athleta across 2,506 stores and 1,063 franchise locations.
how it gets paid
Last year Gap made $15.1B in revenue. Old Navy was the main engine at $8.4B, or 56% of sales.
why it's growing
Revenue grew 1.3% last year. The 10% EPS miss mattered most because this stock already has strong momentum.
what just happened
Gap's last report showed $0.45 EPS, which missed the $0.50 estimate by 10%.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
10/100 earnings predictability — expect surprises
11.6x trailing p/e — the market's not buying it — or you found a deal
2.8% dividend yield — cash in your pocket every quarter
15.5% return on capital — nothing to write home about
xvary composite: 56/100 — below average
What they do
Gap sells private-label clothes through Old Navy, Gap, Banana Republic, and Athleta across 2,506 stores and 1,063 franchise locations.
This is scale in plain sight. Gap runs 2,506 stores, 1,063 franchise units, and 30.1 million square feet, which gives you reach that smaller apparel chains cannot buy overnight. Comparable sales rose 5% in the third quarter, the seventh straight positive quarter, even while company-operated stores were down about 2%, so you are seeing brands and distribution do the lifting.
How they make money
$15.1B
annual revenue · their business grew +1.3% last year
Old Navy
$8.4B
+3.0%
Gap brand
$3.3B
+1.0%
Banana Republic
$1.9B
−3.0%
Athleta
$1.4B
0.0%
Other
$0.1B
0.0%
The products that matter
value-focused apparel retail
Old Navy
largest brand · majority of $15.1B revenue
it drives the majority of the company's $15.1B revenue base, which makes it the brand that matters most if you think this turnaround is real.
core
premium activewear retail
Athleta
$1.4B · ~9% of revenue
the segment table above breaks out Athleta at about $1.4B—smaller than Old Navy but still a named line, not a disclosure gap.
watch
legacy apparel retail
Gap Brand
original brand · legacy anchor
it's one of the legacy brands inside the $15.1B revenue base, and legacy brands only help shareholders if they stay relevant enough to avoid permanent discounting.
legacy
Key numbers
11.6x
trailing p/e
You are paying 11.6 times trailing earnings for a retailer with 11.0% operating margin, which is cheap if the margin holds.
11.0%
operating margin
Operating margin means profit after running the business but before interest and taxes, so what: Gap is keeping 11 cents from each sales dollar.
15.5%
return on capital
Return on capital means how well management turns invested money into operating profit, so what: this is better than a basic retail survival story.
2.8%
dividend yield
Dividend yield means cash paid back to you each year at the current stock price, so what: you are getting paid while the turnaround proves itself.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 15 / 100
- long-term debt $1.5B (14% of capital)
- net profit margin 6.1% — keeps 6 cents of every dollar in revenue
- return on equity 21% — $0.21 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in GAP 3 years ago → it's now worth $24,730.
The index would have given you $14,770.
source: institutional data · total return
What just happened
missed estimates
Gap's last report showed $0.45 EPS (q), which missed the $0.50 estimate by 10%.
Revenue still rose to $4.23B in the quarter, and full-year revenue reached $15.1B (about +1.3% FY in the summary above vs. ~+2% cited for the first nine months in some commentary—different windows). The setup is classic retail: sales held up, but investors wanted a cleaner beat.
$4.23B
rev (q)
$0.45
eps (q)
38.1%
gross margin (q)
the number that mattered
The 10% EPS miss mattered most because this stock already has strong momentum, and momentum stocks get punished when the quarter lands below the whisper.
-
results at the gap likely remained steady into year-end.
-
compared to last year, overall sales had risen by around 2% through the first three quarters of fiscal 2025 (ends january 31st).
-
that's despite fewer company-operated units, which, at 2,497 (as of november 1st), were close to 2% lower than at the same time in fiscal 2024.
-
a 5% improvement in third-quarter comparable sales marked the seventh-straight positive result in the key metric.
-
not surprisingly, old navy — which accounts for almost two-thirds of the retailer's total square footage — and flagship gap, were the main drivers, posting same-store sales advances of 6% and 7%, respectively.
source: company earnings report, 2026
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What could go wrong
the #1 risk is an Old Navy stumble inside a thin-margin apparel model.
high
Old Navy carries the story
Old Navy drives the majority of Gap's $15.1B revenue. If traffic, merchandising, or promotions slip there, the rest of the portfolio usually can't bail you out.
majority-of-revenue exposure means one brand can move the whole income statement.
med
5.6% net margin is not much cushion
Gap keeps about 6 cents of every revenue dollar. More discounting, heavier freight, or weaker consumer demand can pressure earnings faster than the top line suggests.
small margin compression on $15.1B revenue can have an outsized effect on EPS.
med
earnings are hard to model
A 10/100 earnings predictability score is the system telling you this business does not deliver smooth, boring quarters. Estimates can move around fast.
low predictability raises the odds of sharp post-earnings moves even when the long-term story looks intact.
low
the market may never pay up
The stock trades at 11.6x trailing earnings with a $30 target midpoint. Even if operations improve, the multiple may stay modest because investors still see Gap as a cyclical retailer, not a compounder.
valuation upside is capped if the story improves slowly rather than dramatically.
When you run a $15.1B apparel business at a 5.6% net margin, you do not need a disaster to hurt earnings. You just need a few more markdowns than planned.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
net margin holding above 5.6%
This is the cleanest scoreboard item on the page. If margin slips, the low multiple stops looking cheap and starts looking deserved.
calendar
next earnings date
Gap's estimated next earnings date is may 21, 2026. You're listening for margin commentary as much as the revenue number.
trend
revenue moving toward $16B
The street expects $16B in fiscal 2026 revenue. If that stalls near the current $15.1B base, the turnaround narrative weakens.
risk
Old Navy's share of the story
Because Old Navy drives the majority of revenue, any sign of brand fatigue there matters more than noise anywhere else in the portfolio.
Analyst rankings
short-term outlook
average
momentum score 3 means the stock is acting like the market, not leading it. in human-speak, analysts are not calling for an immediate breakout.
risk profile
average
stability score 3 means typical risk on paper. The 15/100 price stability score is the reminder that the tape can still get messy.
chart momentum
top 5%
technical score 1 is the highest rating. In plain English: the chart looks much better than the business is usually given credit for.
earnings predictability
10 / 100
earnings predictability is weak. That's analyst-speak for this: expect sharper quarter-to-quarter swings than you'd get from a steadier business.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 249 buyers vs. 218 sellers in 3q2025. total institutional holdings: 0.2B shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$17
$43
$25
current price
$30
target midpoint · +18% from current · 3-5yr high: $35 (+40% · 11% ann'l return)
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