Gap Trending Lower While Fundamentals are Average
Clothing retailer Gap, Inc. (NYSE: GPS) has been trending lower since peaking in January. The stock has gone through a series of lower highs over the course of the year and in the last six months a trend channel has formed. The channel is pretty clearly defined with a few down cycles mixed with one upward cycle and then a consolidation.
We see that the stock just hit the upper rail of the channel earlier this week. This channel is a little different in that it is more clearly defined by the lows. Most downward sloped trend channels I point out are more clearly defined by the highs.
The daily stochastics just hit overbought territory this week and have since made a bearish crossover. This has been a decent bearish signal for the stock in recent months.
When you look at Gap’s fundamentals, they are average, but they aren’t great. Earnings have been stagnant over the last three years, but the most recent quarterly report showed earnings growth of 19%. Analysts expect earnings growth of 20% for the year.
Sales have only grown at a rate of 1% per year over the last three years and only grew by 7% in the most recent quarter.
One measurement where the company does rather well is with the return on equity. Gap’s ROE is at 27.8% at this time. The profit margin is only 8.6% while the operating margin is at 8.4%.
Given these fundamentals, the stock may have a tougher time breaking out of the downward trend.
GAP's RSI Oscillator leaves overbought zone
The 10-day RSI Indicator for GAP moved out of overbought territory on September 12, 2025. This could be a sign that the stock is shifting from an upward trend to a downward trend. Traders may want to look at selling the stock or buying put options. Tickeron's A.I.dvisor looked at 36 instances where the indicator moved out of the overbought zone. In of the 36 cases the stock moved lower in the days that followed. This puts the odds of a move down at .
Technical Analysis (Indicators)
Bearish Trend Analysis
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In of 50 cases where GAP's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for GAP turned negative on September 16, 2025. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 50 similar instances when the indicator turned negative. In of the 50 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where GAP declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
GAP broke above its upper Bollinger Band on September 04, 2025. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on August 12, 2025. You may want to consider a long position or call options on GAP as a result. In of 81 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
GAP moved above its 50-day moving average on August 21, 2025 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for GAP crossed bullishly above the 50-day moving average on August 25, 2025. This indicates that the trend has shifted higher and could be considered a buy signal. In of 15 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where GAP advanced for three days, in of 283 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 207 cases where GAP Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (2.465) is normal, around the industry mean (7.528). P/E Ratio (9.832) is within average values for comparable stocks, (26.151). Projected Growth (PEG Ratio) (2.034) is also within normal values, averaging (2.227). Dividend Yield (0.028) settles around the average of (0.028) among similar stocks. P/S Ratio (0.576) is also within normal values, averaging (7.459).
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. GAP’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. GAP’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 78, placing this stock better than average.
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General Information
an operator of stores that retail clothing, accessories and personal care products
Industry ApparelFootwearRetail
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