The Gap, Inc. (GPS) DCF Valuation
A discounted-cash-flow model values The Gap, Inc. (GPS) at about $19.43 (TGM base case). Today's price of $20.16 sits above that range — by these conservative assumptions it looks richly valued; the reverse-DCF below is the better lens for a high-growth name.
Reverse DCF: at today's $20.16, the market is pricing in roughly +5.4%/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 is betting on acceleration above its track record.
Current Price
$20.16
Fair-Value Range
$19.43
Market-Implied Growth
+5.4%/yr
vs +2.6% 5Y actual
GPS 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 · 0.46B shares · net debt $3.0B
Estimated Fair Value
$19.43
-3.6% vs $20.16
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 $20.16; red = below. Your current case is outlined.
| WACC ↓ / Terminal → | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
|---|---|---|---|---|---|
| 8.0% | $25.74 | $27.40 | $29.35 | $31.70 | $34.57 |
| 9.0% | $21.18 | $22.32 | $23.62 | $25.15 | $26.95 |
| 10.0% | $17.71 | $18.52 | $19.43 | $20.47 | $21.68 |
| 11.0% | $14.98 | $15.58 | $16.23 | $16.98 | $17.82 |
| 12.0% | $12.79 | $13.23 | $13.72 | $14.26 | $14.87 |
About The Gap, Inc.
The Gap, Inc. functions as a prominent global apparel and accessories retailer. The company provides a diverse array of clothing, accessories, and personal care products tailored for men, women, and children, primarily under its renowned brands: Old Navy, Gap, Banana Republic, and Athleta. Its extensive product range encompasses essential items like denim, t-shirts, fleece wear, and khakis, along with accessories such as eyewear, jewelry, footwear, handbags, and fragrances. Athleta specifically focuses on women and girls, offering fitness and lifestyle products suitable for activities from yoga and sports to travel and everyday use. The company engages with its customer base through a multifaceted distribution network, which includes its own company-operated retail stores, independently owned franchise locations, various digital e-commerce platforms, collaborations with third-party vendors, and traditional catalog sales. To expand its international presence, The Gap, Inc. has forged franchise agreements, empowering unaffiliated partners to manage Old Navy, Gap, Athleta, and Banana Republic stores and online platforms throughout Asia, Europe, Latin America, the Middle East, and Africa. As of December 31, 2021, the company's physical retail footprint consisted of 2,835 company-owned stores and an additional 564 franchised outlets. Established in 1969, The Gap, Inc. maintains its corporate headquarters in San Francisco, California.
- Sector
- Consumer Cyclical
- Industry
- Apparel - Retail
- CEO
- Richard Dickson