As an investor, you may be contemplating increasing your stake in Gap Inc. (NYSE: GPS), a notable player in the Consumer Cyclical sector, specifically within the Specialty Retail service category. Before making your decision, it's crucial to consider the company's
financial health and market performance. Gap Inc. currently has a market value of $11.2 billion, slightly above its real value of $10.96 billion. However, the hype value stands at $11.26 billion, suggesting that the market might be slightly overvaluing the stock. Analysts have given a range of target prices for the stock, with the lowest estimated target price at $7 and the highest at $18. The average target price stands at $11.285, with a possible upside price of $13.62 and a downside of $8.39. Out of 14 estimates, there are 3 strong buys, 8 holds, 1 sell, and 2 strong sells, leading to an overall consensus of 'Hold'. The fiscal year-end in January could also influence the stock's performance. Therefore, it's essential to weigh these factors before deciding to increase your investment in Gap Inc. While strategic planning is crucial for successful stock investment, sometimes bold action can be equally important. This may be the case with Gap Inc. Let's delve into why we maintain our confidence in the potential for recovery. As of September 17, 2023, the company's stock is trading at $11.20. Historically, Gap Inc. has a hype elasticity of 0.06, while the average price elasticity to hype among its competitors is approximately -0.18. The company's value is projected to increase following the next headline, with the price expected to rise to $11.26. However, the recent volatility of media hype's impact on Gap's stock price is significantly over 100%, making price predictions based on social media less reliable. The price appreciation following the next news release is projected to be 0.54%, while the current daily expected return stands at 0.42%. The volatility of related hype on Gap is about 612.47%, with the expected price after the next announcement by competitors being $11.02. Considering a 90-day investment horizon, the next projected press release is expected in approximately 6 days.
The successful prediction of Gap
stock price could yield a significant profit to investors. But is it possible? The efficient-market hypothesis suggests that all published
stock prices of traded companies, such as Gap Inc, already reflect all publicly available information. This academic statement is a fundamental principle of many financial and investing theories used today. However, the typical investor usually disagrees with a 'textbook' version of this hypothesis and continually tries to find mispriced stocks to increase returns. We use internally-developed statistical techniques to arrive at
the intrinsic value of Gap based on Gap hews, social hype, general headline patterns, and widely used
predictive technical indicators. We also calculate exposure to Gap's
market risk, different
technical and
fundamental indicators, relevant financial multiples and ratios, and then
comparing them to Gap's related companies.
Use Technical Analysis to project Gap expected Price
Gap technical stock analysis exercises models and trading practices based on price and volume transformations, such as the moving averages, relative strength index, regressions, price and return correlations, business cycles, delisted stock market cycles, or different charting patterns.
A focus of Gap technical analysis is to determine if market prices reflect all relevant information impacting that market. A technical analyst looks at the history of Gap trading pattern rather than external drivers such as economic, fundamental, or social events. It is believed that price action tends to repeat itself due to investors' collective, patterned behavior. Hence technical analysis focuses on identifiable price trends and conditions.
More Info...Going after Gap Financials
Gap Inc reported the last year's revenue of 15.62
B. Reported Net Loss for the year was (202
M) with profit before taxes, overhead, and interest of 6.63
B.
Cost of Revenue Breakdown
Gap Cost of Revenue yearly trend continues to be comparatively stable with very little volatility. Cost of Revenue is likely to outpace its year average in 2023. Cost of Revenue usually refers to the aggregate cost of goods produced and sold and services rendered during the reporting period. Where this item is not contained on the company consolidated financial statements and cannot otherwise be imputed the value of 0 is used. Gap Cost of Revenue is comparatively stable at the moment as compared to the past year. Gap reported Cost of Revenue of 10.26 Billion in 2022
| 2010 | 9.86 Billion |
| 2014 | 10.25 Billion |
| 2020 | 10.26 Billion |
| 2023 | 10.74 Billion |
Gap Inc. (NYSE: GPS), a key player in the Apparel Retail industry, is a stock that has been on the radar of many investors. With a market capitalization of
$4.14 billion and a current valuation of
$8.36 billion, the company is showing promising signs. The company's book value per share stands at 6.13X, with a price to book ratio of 1.97X, indicating that the stock is reasonably priced. The company's
financial health is also noteworthy. Gap Inc. holds $1.22 billion in cash and equivalents, with a working capital of $1.36 billion. This strong liquidity position, reflected in a current ratio of 1.49X, enables the company to meet its short-term obligations. However, investors should be aware of the company's risk factors. The downside deviation of 2.61 and a probability of bankruptcy at 35.10% suggest potential volatility. The company's beta of 1.92 also indicates a higher level of market risk compared to other stocks. Despite these risks, Gap Inc. has a positive return on equity of 0.0473 and a profit margin of 0.0072%, demonstrating its profitability. With a five-year return of 4.21%, the stock could be a viable addition to your portfolio.
Will Gap continue to gain?
The recent decline in the standard deviation of Gap Inc's stock to 2.72 suggests a potential decrease in volatility. This could signal a period of stability for the company's stock, which might be attractive to investors who are risk-averse. Given the company's robust
fundamentals and strategic initiatives, this could be an ideal time to consider adding Gap Inc to your portfolio. Despite the potential for diminished volatility, the stock has the capacity to maintain its upward trend. Currently, Gap Inc exhibits a below-average downside deviation. It has an Information Ratio of 0.09 and a Jensen Alpha of 0.24. However, we recommend investors to further scrutinize Gap Inc's expected returns to ensure all indicators align with the current outlook about its relatively low value at risk. Understanding different
market volatility trends often assists investors in timing the market.
Proper utilization of volatility indicators allows traders to gauge Gap's stock risk against market volatility during both bullish and bearish trends. The heightened level of volatility that accompanies bear markets can directly affect
Gap's stock price, adding stress to investors as they witness their shares' value decline. This typically compels investors to rebalance their portfolios by purchasing different stocks as prices drop. Despite a modest market drop, Gap Inc's stock has shown resilience, with its valuation real value standing at
10.96 and the market value at
11.2. With 8 analysts holding, 3 strong buys, and a consensus of 'Hold', the stock presents a potential upside price of 13.62, well above the naive expected forecast value of 11.01. However, investors should also consider the possible downside price of 8.39. While there is one sell and two strong sells among the 14 analyst estimates, the highest estimated target price stands at a promising 18. Therefore, Gap Inc's stock may offer a balanced risk-reward profile for investors, particularly those with a long-term perspective. .
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Rifka Kats is a Member of Macroaxis Editorial Board. Rifka writes about retail product and service companies from the perspective of a regular consumer and sophisticated investor at the same time. She is passionate about corporate ethics and equality in the workforce.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Rifka Kats do not own shares of Gap Inc. Please refer to our
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