Are Gap Inc’s Earnings Volatile?

-26.81%
Downside
24.69
Market
18.07
Trefis
GPS: Gap logo
GPS
Gap

  • Despite the company not being in the best shape over the last three years, Gap Inc’s capital structure has prevented its earnings for becoming volatile.
  • Since both debt and interest payments are low relative to its EBIT, the company does not have a high degree of leverage
  • Moreover, its degree of leverage has remained stable over the past three years and we don’t expect it to increase much in the coming years
  • And the marginal increase is expected to come from a rebound in interest expense rates

Gap Inc degree of financial leverage

Have more questions about Gap Inc? See the links below:

Relevant Articles
  1. Does Gap Stock Have More Room To Run After Rising 67% This Year?
  2. Gap Q2 Earnings: What Are We Watching?
  3. Gap Stock Has Upside Potential To Its Pre-Inflation Peak
  4. Gap’s Stock Looks Expensive At $14
  5. Will Gap Stock Trade Lower Post Q3 Results?
  6. Gap’s Q2 Earnings Preview: What Are We Watching?

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Gap Inc
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