Is Gap, Inc. overvalued or undervalued?

As of 7 July 2025, the valuation grade for Gap, Inc. has moved from fair to attractive, indicating a more favorable assessment of its stock. The company appears undervalued, supported by a P/E ratio of 10, a PEG ratio of 0.43, and an EV to EBITDA ratio of 4.94. When compared to peers, Urban Outfitters, Inc. has a higher P/E ratio of 13.77, while Abercrombie & Fitch Co. stands at 15.96, highlighting Gap, Inc.'s relative attractiveness in valuation metrics.
Despite a recent decline in stock performance, with a 1-week return of -4.99% compared to the S&P 500's 1.05%, the longer-term outlook remains positive, as evidenced by a 3-year return of 152.41% versus the S&P 500's 70.41%. Overall, Gap, Inc. presents a compelling investment opportunity given its strong valuation ratios and favorable peer comparisons.