GAP
Through the investors’ lenses
Each of these investors has said in public what they look at before buying. Click a name to see how this company measures up — a tick where it passes one of their tests, a cross where it does not.
Warren Buffett 3/4
| Measure | GAP | Checked against | |
|---|---|---|---|
| Owner earnings | $842.00m | positive | ✓ |
| Return on equity | 21.5% | median 11.7% | ✓ |
| Debt to equity | 0.39x | median 0.79x | ✓ |
| Operating margin | 7.3% | median 15.0% | ✗ |
Passes 3 of 4. To be clear: Warren Buffett has never said anything about GAP. These are the company’s own figures put through the tests he described. What he looks at, and why →
Terry Smith 2/4
| Measure | GAP | Checked against | |
|---|---|---|---|
| Return on capital employed | 21.1% | median 10.1% | ✓ |
| Cash conversion | 1.58x | median 1.78x | ✗ |
| Operating margin | 7.3% | median 15.0% | ✗ |
| Debt to equity | 0.39x | median 0.79x | ✓ |
Passes 2 of 4. To be clear: Terry Smith has never said anything about GAP. These are the company’s own figures put through the tests he described. What he looks at, and why →
Charlie Munger 2/3
| Measure | GAP | Checked against | |
|---|---|---|---|
| Return on capital employed | 21.1% | median 10.1% | ✓ |
| Return on equity | 21.5% | median 11.7% | ✓ |
| Operating margin | 7.3% | median 15.0% | ✗ |
Passes 2 of 3. To be clear: Charlie Munger has never said anything about GAP. These are the company’s own figures put through the tests he described. What he looks at, and why →
Chuck Akre 2/4
| Measure | GAP | Checked against | |
|---|---|---|---|
| Return on equity | 21.5% | median 11.7% | ✓ |
| Debt to equity | 0.39x | median 0.79x | ✓ |
| Cash conversion | 1.58x | median 1.78x | ✗ |
| Return on equity, sustained | 6 of 10 | 8 of 10 above median | ✗ |
Passes 2 of 4. To be clear: Chuck Akre has never said anything about GAP. These are the company’s own figures put through the tests he described. What he looks at, and why →
Philip Fisher 2/4
| Measure | GAP | Checked against | |
|---|---|---|---|
| Operating margin | 7.3% | median 15.0% | ✗ |
| Net margin | 5.3% | median 10.2% | ✗ |
| Return on capital employed | 21.1% | median 10.1% | ✓ |
| Operating margin, held or improving | 7.3% | 10-yr median 4.9% | ✓ |
Passes 2 of 4. To be clear: Philip Fisher has never said anything about GAP. These are the company’s own figures put through the tests he described. What he looks at, and why →
Walter Schloss 2/2
| Measure | GAP | Checked against | |
|---|---|---|---|
| Current ratio | 1.75x | median 1.25x | ✓ |
| Debt to equity | 0.39x | median 0.79x | ✓ |
Passes 2 of 2. To be clear: Walter Schloss has never said anything about GAP. These are the company’s own figures put through the tests he described. What he looks at, and why →
Benjamin Graham 1/3
| Measure | GAP | Checked against | |
|---|---|---|---|
| Current ratio | 1.75x | 2.00x published | ✗ |
| Long-term debt to working capital | 0.60x | 1.00x published | ✓ |
| Positive earnings, ten years running | 3 yrs | 10 published | ✗ |
Passes 1 of 3. To be clear: Benjamin Graham has never said anything about GAP. These are the company’s own figures put through the tests he described. What he looks at, and why →
Joel Greenblatt 1/1
| Measure | GAP | Checked against | |
|---|---|---|---|
| Return on capital employed | 21.1% | median 10.1% | ✓ |
Passes 1 of 1. To be clear: Joel Greenblatt has never said anything about GAP. These are the company’s own figures put through the tests he described. What he looks at, and why →
Peter Lynch 1/2
| Measure | GAP | Checked against | |
|---|---|---|---|
| Debt to equity | 0.39x | median 0.79x | ✓ |
| Net margin | 5.3% | median 10.2% | ✗ |
Passes 1 of 2. To be clear: Peter Lynch has never said anything about GAP. These are the company’s own figures put through the tests he described. What he looks at, and why →
| Basis | Payout | Why |
|---|---|---|
| GAAP earnings | 31.0% | whyThe figure most screeners publish. |
| Operating cash flow | 19.1% | whyBefore capital spending. |
| Free cash flow | 30.0% | whyAfter maintaining the business. |
Spread between highest and lowest: 11.9 percentage points. Same filings, different denominators.
Coverage rating 60 / 100 — Adequate. ? Peer standing 30/50Direction 30/30Stability 0/20
Free cash flow payout, last 6 years
| Fiscal year | Payout |
|---|---|
| 2026-01-31 | 30.0% |
| 2025-02-01 | 21.7% |
| 2024-02-03 | 20.0% |
| 2022-01-29 | 196.5% |
| 2020-02-01 | 51.3% |
| 2019-02-02 | 55.2% |
Coverage worsened sharply this year, 21.7% to 30.0%, after no clear trend before it. One year is not a trend, but it is worth knowing which direction the last one moved.
59% of the 44 consumer discretionary here pay out more.
The arithmetic
- GAAP earnings — dividends declared per share $0.660 ÷ diluted EPS $2.13
- Operating cash flow — dividends paid $247m ÷ operating cash flow $1,293m
- Free cash flow — dividends paid $247m ÷ (operating cash flow $1,293m − capex $470m)
Where the figures came from
- 10-K filed 2026-03-17 · accession 0001628280-26-018573
All public at sec.gov — you should not have to take our word for it.
Computed straight from SEC XBRL. A number that looks wrong to you is more useful to us than agreement — tell us.
What the free cash flow payout ratio measures, and where every company here sits on it.
Also on: rated adequate · when it files.
When this changes
Every figure above is recomputed whenever GAP files. The monthly letter carries what filed, what moved, and one finding computed across every company here.