The Gap, Inc. (GAP) DCF Valuation
Transparent DCF models put The Gap, Inc. (GAP)'s fair value in a range of $34.36 – $61.23 — the low end is TGM's conservative base case (5% FCF growth, 10% discount), the high end the analyst consensus (FMP). Today's price of $21.36 sits below that range — by these conservative assumptions it screens as potentially undervalued.
Reverse DCF: at today's $21.36, the market is pricing in roughly -1.9%/yr free-cash-flow growth over the next decade (at a 10% required return) — versus its actual 5-year FCF CAGR of +2.6%. The price assumes a slowdown from its track record — a potential value signal if growth holds.
Current Price
$21.36
Fair-Value Range
$34.36 – $61.23
Market-Implied Growth
-1.9%/yr
vs +2.6% 5Y actual
GAP DCF Fair Value Calculator
Edit the assumptions to see how they change the estimated fair value. Illustrative model — not investment advice. Defaults to a conservative base case; the analyst (FMP) DCF, where available, is shown as a reference below.
Base inputs: FCF $724.0M · 0.36B shares · net cash $490.0M
Estimated Fair Value
$34.36
+60.9% vs $21.36
Sensitivity — fair value by discount rate × terminal growth
How the estimated fair value shifts with the discount rate (WACC) and terminal growth, holding your 5.0%/yr FCF growth and 10-year horizon fixed. Green = above today's $21.36; red = below. Your current case is outlined.
| WACC ↓ / Terminal → | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
|---|---|---|---|---|---|
| 8.0% | $42.37 | $44.47 | $46.96 | $49.94 | $53.58 |
| 9.0% | $36.58 | $38.02 | $39.68 | $41.62 | $43.90 |
| 10.0% | $32.18 | $33.20 | $34.36 | $35.68 | $37.21 |
| 11.0% | $28.71 | $29.46 | $30.30 | $31.24 | $32.31 |
| 12.0% | $25.92 | $26.49 | $27.11 | $27.80 | $28.57 |
About The Gap, Inc.
The Gap, Inc. operates as a prominent apparel retail enterprise, offering a diverse array of clothing, accessories, and personal care products for men, women, and children. These goods are marketed under its well-known brands: Old Navy, Gap, Banana Republic, and Athleta. Its extensive product line features staples such as denim, t-shirts, fleece wear, and khakis, alongside accessories like eyewear, jewelry, footwear, handbags, and fragrances. Athleta specifically caters to women and girls with fitness and lifestyle products designed for activities including yoga, training, sports, travel, and everyday wear. The company distributes its products through various sales channels, including its own company-operated stores, franchised locations, e-commerce websites, third-party collaborations, and catalogs. Furthermore, The Gap, Inc. has established franchise partnerships with independent operators, enabling the operation of Old Navy, Gap, Athleta, and Banana Republic stores and online platforms across Asia, Europe, Latin America, the Middle East, and Africa. As of December 31, 2021, the company's retail footprint comprised 2,835 corporate-owned stores and an additional 564 franchised outlets. Incorporated in 1969, The Gap, Inc. maintains its corporate headquarters in San Francisco, California.
- Sector
- Consumer Cyclical
- Industry
- Apparel - Retail
- CEO
- Richard Dickson