Is Gap, Inc. overvalued or undervalued?

As of 30 May 2025, the valuation grade for Gap, Inc. has moved from fair to attractive, indicating a more favorable assessment of the company's value. The company appears to be undervalued, particularly when considering its P/E ratio of 10, which is significantly lower than the industry average, and a PEG ratio of 0.43, suggesting strong growth potential relative to its price. Additionally, Gap, Inc. boasts a robust ROCE of 35.42% and an impressive ROE of 25.90%, highlighting its efficient use of capital and strong profitability.
In comparison to its peers, Gap, Inc. stands out with a more attractive valuation, as evidenced by Tapestry, Inc. with a P/E ratio of 14.99 and Burlington Stores, Inc. at 32.69, both of which are deemed expensive. The EV to EBITDA ratio for Gap, Inc. is 4.94, which is also favorable compared to Tapestry's 11.74. Despite recent stock performance showing a decline of 9.31% year-to-date against a 2.44% rise in the S&P 500, the long-term outlook remains positive, especially given the company's strong historical returns over three and five years.