The Gap, Inc. (GAP) vs Ross Stores, Inc. (ROST)

The Gap, Inc. and Ross Stores, Inc. are both Apparel Retail companies. Ross Stores, Inc. is the larger, with a market value of $75.2B against $7.7B — 9.8× the size. The Gap, Inc. trades at the lower P/E: 6.4× against 28.3×. Ross Stores, Inc. grew revenue faster over the last twelve months: 14.0% against 1.05%. Ross Stores, Inc. has the higher net margin (10.9% vs 8.14%) and the higher return on invested capital (60.6% vs 35.6%). Both pay a dividend; The Gap, Inc. yields more (2.94% vs 0.93%). Across the 23 metrics below, Ross Stores, Inc. leads on 12 and The Gap, Inc. on 11.

Valuation

Metric GAP ROST Apparel Retail median
P/E 6.38 28.35 12.56
P/S 0.51 3.06 0.35
P/B 1.96 11.12 1.57
Price to free cash flow 8.09 26.88 11.15
EV/EBITDA 3.36 18.35 7.42
EV/Sales 0.48 2.93 0.51
Earnings yield 15.67% 3.53% 5.76%
Free cash flow yield 12.35% 3.72% 4.34%

Profitability

Metric GAP ROST Apparel Retail median
Gross margin 43.26% 29.67% 41.90%
Operating margin 10.99% 13.75% 2.50%
Net margin 8.14% 10.85% 3.41%
Free cash flow margin 6.24% 11.38% 2.86%
Return on equity 33.78% 42.63% 7.71%
Return on assets 9.98% 17.45% 2.85%
Return on invested capital 35.57% 60.64% 6.41%

Growth

Metric GAP ROST Apparel Retail median
Revenue growth (TTM) 1.05% 14.02% 4.14%
EPS growth (last fiscal year) (3.18%) 4.59% —
Revenue growth, 5-year CAGR 2.17% 12.67% 5.92%
Net income growth, 5-year CAGR 0.00% 90.55% 0.00%

Health

Metric GAP ROST Apparel Retail median
Debt to equity 0.38 0.15 0.01
Current ratio 1.82 1.61 1.54
Net debt to EBITDA (0.94) (0.96) (0.29)

Dividend

Metric GAP ROST Apparel Retail median
Dividend yield 2.94% 0.93% 2.94%
Payout ratio 2.07 0.27 0.00

Size

Metric GAP ROST Apparel Retail median
Market cap 7.66b 75.15b 358.41m

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