Critical Survey: GAP (GAP) versus Its Rivals

GAP (NYSE:GAP) is one of 285 public companies in the “Specialty Retail” industry, but how does it weigh in compared to its rivals? We will compare GAP to related businesses based on the strength of its profitability, earnings, risk, valuation, institutional ownership, dividends and analyst recommendations.

Dividends

GAP pays an annual dividend of $0.70 per share and has a dividend yield of 3.3%. GAP pays out 20.9% of its earnings in the form of a dividend. As a group, “Specialty Retail” companies pay a dividend yield of 2.1% and pay out 35.4% of their earnings in the form of a dividend. GAP has increased its dividend for 1 consecutive years. GAP is clearly a better dividend stock than its rivals, given its higher yield and lower payout ratio.

Risk & Volatility

GAP has a beta of 2.12, meaning that its share price is 112% more volatile than the S&P 500. Comparatively, GAP’s rivals have a beta of 1.91, meaning that their average share price is 91% more volatile than the S&P 500.

Valuation & Earnings

This table compares GAP and its rivals top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
GAP	$15.37 billion	$816.00 million	6.43
GAP Competitors	$7.05 billion	$386.47 million	32.99

GAP has higher revenue and 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	8.14%	19.72%	5.94%
GAP Competitors	-3.69%	-13.95%	3.18%

Analyst Ratings

This is a breakdown of recent ratings and price targets for GAP and its rivals, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GAP	1	12	6	2	2.43
GAP Competitors	3674	15593	21618	590	2.46

GAP presently has a consensus target price of $27.07, indicating a potential upside of 25.68%. As a group, “Specialty Retail” companies have a potential upside of 7.36%. Given GAP’s higher possible upside, equities analysts plainly believe GAP is more favorable than its rivals.

Institutional & Insider Ownership

58.8% of GAP shares are owned by institutional investors. Comparatively, 51.9% of shares of all “Specialty Retail” companies are owned by institutional investors. 31.0% of GAP shares are owned by company insiders. Comparatively, 20.5% of shares of all “Specialty Retail” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

GAP beats its rivals on 12 of the 15 factors compared.

GAP Company Profile

Gap, Inc. operates as a global apparel retail company, which offers clothing, apparel, accessories, and personal care products for men, women, and children. The firm operates through the following segments: Gap Global, Old Navy Global, Banana Republic Global, Athleta, and Other. The Gap Global segment includes apparel and accessories for men and women under the Gap brand, along with the GapKids, BabyGap, GapMaternity, GapBody, and GapFit collections. The Old Navy Global segment offers clothing and accessories for adults and children. The Banana Republic Global segment provides clothing, eyewear, jewelry, shoes, handbags, and fragrances. The Athleta segment offers fitness apparel for women. The company founded by Donald G. Fisher and Doris F. Fisher in July 1969 and is headquartered in San Francisco, CA.