Discounted Cash Flow (DCF) Analysis Levered

The Gap, Inc. (GPS)

$14.825

-0.44 (-2.85%)

All numbers are in Millions, Currency in USD

Stock DCF: 8.05 | 14.825 | overvalue

Free Cash Flow

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	15,855	16,580	16,383	13,800	16,670	17,020.71	17,378.79	17,744.41	18,117.72	18,498.88
Revenue (%)
Operating Cash Flow	1,380	1,381	1,411	237	1,140.36	1,164.35	1,188.85	1,213.86	1,239.40	1,265.47
Operating Cash Flow (%)
Capital Expenditure	-731	-705	-1,045	-392	-753.56	-769.41	-785.60	-802.13	-819	-836.23
Capital Expenditure (%)
Free Cash Flow	649	676	366	-155	386.80	394.94	403.25	411.73	420.39	429.24

Weighted Average Cost Of Capital

Share price	$ 14.825
Beta	1.888
Diluted Shares Outstanding	383
Cost of Debt
Tax Rate	20.74
After-tax Cost of Debt	1.13%
Risk-Free Rate
Market Risk Premium
Cost of Equity	12.528
Total Debt	11,752
Total Equity	5,677.98
Total Capital	17,429.97
Debt Weighting	67.42
Equity Weighting	32.58
Wacc

Build Up Free Cash Flow

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	15,855	16,580	16,383	13,800	16,670	17,020.71	17,378.79	17,744.41	18,117.72	18,498.88
Operating Cash Flow	1,380	1,381	1,411	237	1,140.36	1,164.35	1,188.85	1,213.86	1,239.40	1,265.47
Capital Expenditure	-731	-705	-1,045	-392	-753.56	-769.41	-785.60	-802.13	-819	-836.23
Free Cash Flow	649	676	366	-155	386.80	394.94	403.25	411.73	420.39	429.24
WACC
PV LFCF						297.42	289.66	282.10	274.73	267.56
SUM PV LFCF										1,787.75

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	4.84
Free cash flow (t + 1)	437.82
Terminal Value	15,416.29
Present Value of Terminal Value	12,171.52

Intrinsic Value

Enterprise Value	13,959.27
Net Debt	10,875
Equity Value	3,084.27
Shares Outstanding	383
Equity Value Per Share	8.05