Glenn Murphy, CEO of Gap (GPS), surprised investors Wednesday after the close of trading by announcing his retirement from the company after seven years at the helm. Taking over for Murphy is Art Peck, the president of Gap’s Growth, Innovation and Digital division.

Investors like certainty, not change; Murphy’s announcement sent shareholders running for the exits, pushing Gap stock down 12.5% in heavy trading Thursday (10 times the normal volume) putting it within pennies of its 52-week low.

When Murphy was named CEO in July 2007, Gap stock was trading at $14.67 on a split- and dividend-adjusted basis. Including Thursday’s drop, Gap stock has achieved a total return of 150%, almost 100 percentage points higher than the SPDR S&P 500 ETF (SPY). His hiring definitely enriched the Fisher family, whose 40% ownership resulted in a $4 billion increase in their aggregate wealth.

Experts are divided on whether Murphy’s departure is a big deal or not. Some analysts believe this dip presents a buying opportunity. Others downgraded Gap stock as a result of the news. While I’m disappointed Murphy’s leaving — I’m a big fan — I do think Art Peck has the necessary business experience to keep GPS headed in the right direction.

Is it time to buy Gap stock? Yes, it is. Here’s why.

Mixed Signals

At age 52 and with several huge initiatives underway — Athleta, Gap China and its digital operations — it seems odd that Murphy would simply walk away with so much left to accomplish. After all, he personally led the Gap brand’s expansion into China as part of his restructuring plan unveiled in October 2012. However, in an April investors’ meeting, Murphy specifically highlighted all three of these initiatives as the future for the company. With Peck the boss of all three, it makes sense that he was a leading candidate to take over.

By the time Murphy steps down in January, he will have been CEO for almost eight years. Although that’s slightly less than the average duration of a Fortune 500 CEO at 9.7 years, it’s longer than his previous CEO role with Shoppers Drug Mart, which interestingly is now part of Loblaws Companies (LBLCF), where he spent 14 years prior to taking the top job at Canada’s largest drug store chain.

Mike Ullman, if you’re reading this, you’d be wise to write up a very lucrative seven-year contract and hand it to Murphy as soon as legally permissible. He’s two for two in turnarounds and would likely welcome the challenge. Just look at what he did for Gap stock.

Gap Stock Valuation

September same-store sales were softer than analysts were expecting, and gross margins in Q3 will be lower than last year at that same time thanks to weakness at its Gap brand. While neither piece of information should be considered good news, I don’t think they’re apocalyptic by any stretch of the imagination. Retail is a volatile game and next month it could just as easily see positive comps that beat consensus estimates.

According to FinViz, there are five apparel store stocks with a market cap of $10 billion or more. Of those, GPS has the lowest valuation with an enterprise value 6 times EBITDA. Gap stock is trading at just 12.7 times free cash flow compared to 22.8 times for Ross Stores (ROST), its nearest peer in terms of market cap.

Of all the major companies in Gap’s peer group, CSIMarket.com says Gap stock has the lowest price-to-free cash flow multiple by far. I don’t think there’s any doubt that Gap’s current valuation is cheap. The only question is whether its financial numbers can hang in there through the holiday season. If Black Friday and Christmas sales are mediocre (they don’t have to be super positive), Gap stock makes a lot of sense at these prices.

Bottom Line

GPS hasn’t consistently traded below $36 since April 2013. That’s 18 months ago when the markets were much lower. You should buy some Gap stock at this point with the proviso that you hold back a bunch of money in case the markets continue to tumble. Getting Gap below $30 would be a really nice entry point. Right now, it’s less than a 20% decline away.

While I have no idea what Art Peck’s going to do with its struggling Gap brand, I’m extremely excited about the possibilities for Athleta, which I’ve been touting for more than three years. I see 2015 as Athleta’s time to shine regardless of whether Laurent Potdevin can reinvigorate Lululemon (LULU).

Glenn Murphy surprised us all with his retirement announcement. It’s not surprising that the board begged him to stay. However, once you’ve made the decision to go, it’s best that you do. Second thoughts are never a good thing.

Peck will do just fine. And so will Gap stock.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.