Is GAP a high-quality business?

AlphaMadera's AlphaQuality grade scores The Gap, Inc. on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how GAP compares to a Buffett-style quality bar.

What is The Gap, Inc.'s AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to GAP based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes GAP a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

GAP - The Gap, Inc.

Price: -- -- | CONSENSUS: Hold DETAILS | PRICE TARGET: $32.67 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Stable Earnings Power

AlphaQuality — archetype-weighted quantitative grade

B- 63.2 / 100 composite

Composite Grade

Composite of six pillars weighted for stable earnings power businesses. Purely quantitative — no stock price or analyst input.

Profitability

Weight: 20%

C 52.0

5yr Avg ROIC 5.2% 36/100
Operating Margin Trend +1.26 pp/yr 89/100

Capital Efficiency

Weight: 15%

B- 66.7

5yr Avg ROE 11.7% 68/100
5yr Share-Count CAGR 0.1% 64/100

Growth Quality

Weight: 15%

C 54.2

5yr Revenue CAGR -2.0% 16/100
5yr EPS CAGR 33.7% 100/100
Revenue-Growth Years (5) 3/5 60/100

Cash Generation

Weight: 15%

B- 68.0

5yr FCF Margin 4.0% 45/100
5yr FCF/NI Conversion 1.23x 96/100

Balance Sheet

Weight: 20%

A- 80.7

Net Debt / EBITDA 1.62x 76/100
Interest Coverage (EBIT/Int) 48.48x 100/100
Altman Z-Score 2.73 67/100

Stability

Weight: 15%

C 56.2

EPS Volatility (σ/μ) 0.37 47/100
Piotroski F-Score 6 67/100
Negative-Revenue Years (5) 2/5 60/100

Not held by any curated guru.

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (20%) — 5yr Avg ROIC, Operating Margin Trend
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (15%) — 5yr Revenue CAGR, 5yr EPS CAGR, Revenue-Growth Years (5)
Cash Generation (15%) — 5yr FCF Margin, 5yr FCF/NI Conversion
Balance Sheet (20%) — Net Debt / EBITDA, Interest Coverage (EBIT/Int), Altman Z-Score
Stability (15%) — EPS Volatility (σ/μ), Piotroski F-Score, Negative-Revenue Years (5)

We deliberately ignore stock price, analyst targets, and consensus ratings so the grade is suitable for backtesting forward returns. A minimum of 5 fiscal years of audited statements is required; distressed and highly leveraged infrastructure businesses are declared ungradable rather than forced into a numeric score.