GAP

Gap, Inc.

Consumer


Presented:05/31/2013
Price:$40.55
Cap:$0.02B
Current Price:$21.63
Cap:$8.14B

Presented

Date05/31/2013
Price$40.55
Market Cap$0.02B
Ent Value$0.02B
P/E Ratio14.22x
Book Value$7.09
Div Yield2.2%
Shares O/S466.00M
Ave Daily Vol4,120,000
Short Int1.26%

Current

Price$21.63
Market Cap$8.14B
The Gap, Inc. operates as an apparel retail company. It offers apparel, accessories, and personal care products for men, women, children, and babies under the Gap, Old Navy, Banana Republic, Piperlime, Athleta, and Intermix brands. The company operates through two segments, Stores and Direct. Its products include maternity apparel; loungewear, sleepwear, intimates, and active apparel for women; and handbags, shoes, jewelry, personal care products, and eyewear for men and women; women’s apparel, footwear, and accessories for sports and fitness activities, including crossover apparel and casualwear; and luxury and contemporary apparel and accessories. The company also has franchise agreements with unaffiliated franchisees to operate stores in Asia, Australia, Eastern Europe, Latin America, the Middle East, and Africa under the Gap and Banana Republic brands. In addition, it sells products that are designed and manufactured by branded third parties under the Piperlime and Intermix brands, as well as collections in partnership with designers and other third-party merchandise under the Gap brand. The Gap, Inc. offers its products through company-operated stores, franchise stores, e-commerce sites, and catalogs. As of May 23, 2013, it had approximately 3,428 store locations in 90 countries worldwide. The Gap, Inc. was founded in 1969 and is headquartered in San Francisco, California.

Highlights

The presenter believes GPS’ current valuation is extremely attractive, and offers investors a compelling risk/ reward profile. The company has a large revenue base and its main revenue drivers are Gap (~40%) and Old Navy (~40%), with Banana Republic and Athleta contributing in much smaller ways (he noted the latter is growing well, but is less than 5% of revenues). GPS has been friendly to shareholders over time, returning an estimated 70% of its market cap to shareholders. The presenter sees the potential for GPS to trade up to the $60 level (15x his $4 2015 EPS estimate, vs. the Street at $3.00), and offered the following points supporting his bullish view:

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Idea Discussion

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