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Is The Gap (GAP) a Great Value Stock Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is The Gap (GAP - Free Report) . GAP is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 10.86. This compares to its industry's average Forward P/E of 15.94. Over the past 52 weeks, GAP's Forward P/E has been as high as 22.71 and as low as 9.98, with a median of 15.79.

Investors should also note that GAP holds a PEG ratio of 1.16. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. GAP's industry has an average PEG of 1.39 right now. Over the past 52 weeks, GAP's PEG has been as high as 4.60 and as low as 1.07, with a median of 1.42.

Another notable valuation metric for GAP is its P/B ratio of 2.79. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 4.41. Over the past year, GAP's P/B has been as high as 4.07 and as low as 1.93, with a median of 2.99.

Finally, investors should note that GAP has a P/CF ratio of 6.47. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. GAP's current P/CF looks attractive when compared to its industry's average P/CF of 12.77. Over the past 52 weeks, GAP's P/CF has been as high as 14.18 and as low as 5.85, with a median of 7.49.

These figures are just a handful of the metrics value investors tend to look at, but they help show that The Gap is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GAP feels like a great value stock at the moment.


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