Are Gap Inc’s Earnings Volatile?

June 1st, 2016 by Trefis Team
-9.92%
Downside
24.79
Market
22.33
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
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  3. Mind The Gap: Underwhelming Q2 Earnings Likely For The Apparel Retailer
  4. With The Stock Almost Flat This Year, Will Q1 Results Drive Gap’s Stock Higher?
  5. Gap Stock Almost Flat This Year, What’s Next?
  6. Does Gap Stock Have More Room To Run After Rising 67% This Year?

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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