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Should You Buy Urban Outfitters (URBN) Post Q2 Earnings?
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More than 15 days have passed since Urban Outfitters Inc. (URBN - Free Report) reported its second-quarter fiscal 2017 results and the stock is still rallying. For some investors, this might look like a ready-to-eat dish. This is because immediately after an earnings release, a company comes on investors’ radar and better-than-expected results make its stock a favored pick or vice versa. Therefore, it is around this time that one should decide whether it will be prudent to keep the stock for the long term or shun it immediately to avoid hurting the portfolio.
Shares Skyrocketing
Since Urban Outfitters' announcement of quarterly numbers on Aug 16, 2016, its shares have gained nearly 15%. The company reported earnings per share of 66 cents, outpacing the Zacks Consensus Estimate of 56 cents and also increasing 26.9% year over year. The company’s results were driven by strong performance of its Urban Outfitters brands. In the trailing four quarters, the company’s earnings surpassed the Zacks Consensus Estimate by an average of 6.7%.
Net sales of Urban Outfitters came in at $890.6 million during the reported quarter, up 3% from the year-ago figure of $867.5 million. Sales also exceeded the Zacks Consensus Estimate of $889 million. The top-line improvement was driven by a rise in comparable retail segment net sales, an increase in wholesale segment sales and a jump of $12 million in non-comparable sales including the opening of eight net new outlets. Also, sales contribution of $3.6 million from the newly acquired Vetri Family restaurants supported the upside.
Following Urban Outfitters’ sturdy performance, the Zacks Consensus Estimate witnessed an uptrend as analysts raised their estimates. Analysts polled by Zacks are convinced that this Zacks Rank #1 (Strong Buy) stock will see robust performance in the future as well. Over the past 30 days, the Zacks Consensus Estimate for fiscal 2017 jumped 13 cents to $2.07.
Value Score
Investment in stocks on the basis of a diligent value analysis is usually considered one of the best practices. However, it might be difficult for one to look at each parameter and compare it with the peer group for an analysis on whether the stock is attractive from the value perspective. To make the task easy, Zacks has designed the new Style Score System.
The attractiveness of Urban Outfitters as an investment option is confirmed by its Value Style Score of “A”. The Value Style Score condenses all valuation metrics into one actionable score that helps investors to steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of “A” or “B” when combined with a Zacks Rank #1 or #2 (Buy) offer the best upside potential.
Sturdy Fundamentals Underscore Potential
Being a multi-brand and multi-channel retailer, Urban Outfitters offers flexible merchandising strategy. Additionally, the company has a significant domestic and international presence with rapidly expanding e-commerce activities. The company remains committed to improve comparable-store sales performance, sustain investments in direct-to-consumer business, enhance productivity in existing channels, add new brands and optimize inventory level.
We expect Urban Outfitters to witness growth on the back of new store openings, increase in direct penetration, growing wholesale operations, technology advancements and merchandising improvements. We also believe that better product execution and effective inventory management will help boost performance. Management is aggressively focusing on efforts to enhance the performance of its brands through store refurbishment and by bringing in more compelling assortments. The company is also strategically investing in shop-in-shops.
Other Stocks to Consider
Other stocks which warrant a look in the retail sector include The Children's Place, Inc. (PLCE - Free Report) , Tilly's, Inc. (TLYS - Free Report) and Central Garden & Pet Company (CENT - Free Report) . All these stocks sport the same rank as Urban Outfitters. Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
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Should You Buy Urban Outfitters (URBN) Post Q2 Earnings?
More than 15 days have passed since Urban Outfitters Inc. (URBN - Free Report) reported its second-quarter fiscal 2017 results and the stock is still rallying. For some investors, this might look like a ready-to-eat dish. This is because immediately after an earnings release, a company comes on investors’ radar and better-than-expected results make its stock a favored pick or vice versa. Therefore, it is around this time that one should decide whether it will be prudent to keep the stock for the long term or shun it immediately to avoid hurting the portfolio.
Shares Skyrocketing
Since Urban Outfitters' announcement of quarterly numbers on Aug 16, 2016, its shares have gained nearly 15%. The company reported earnings per share of 66 cents, outpacing the Zacks Consensus Estimate of 56 cents and also increasing 26.9% year over year. The company’s results were driven by strong performance of its Urban Outfitters brands. In the trailing four quarters, the company’s earnings surpassed the Zacks Consensus Estimate by an average of 6.7%.
Net sales of Urban Outfitters came in at $890.6 million during the reported quarter, up 3% from the year-ago figure of $867.5 million. Sales also exceeded the Zacks Consensus Estimate of $889 million. The top-line improvement was driven by a rise in comparable retail segment net sales, an increase in wholesale segment sales and a jump of $12 million in non-comparable sales including the opening of eight net new outlets. Also, sales contribution of $3.6 million from the newly acquired Vetri Family restaurants supported the upside.
URBAN OUTFITTER Price
URBAN OUTFITTER Price | URBAN OUTFITTER Quote
Favorable Estimate Revisions
Following Urban Outfitters’ sturdy performance, the Zacks Consensus Estimate witnessed an uptrend as analysts raised their estimates. Analysts polled by Zacks are convinced that this Zacks Rank #1 (Strong Buy) stock will see robust performance in the future as well. Over the past 30 days, the Zacks Consensus Estimate for fiscal 2017 jumped 13 cents to $2.07.
Value Score
Investment in stocks on the basis of a diligent value analysis is usually considered one of the best practices. However, it might be difficult for one to look at each parameter and compare it with the peer group for an analysis on whether the stock is attractive from the value perspective. To make the task easy, Zacks has designed the new Style Score System.
The attractiveness of Urban Outfitters as an investment option is confirmed by its Value Style Score of “A”. The Value Style Score condenses all valuation metrics into one actionable score that helps investors to steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of “A” or “B” when combined with a Zacks Rank #1 or #2 (Buy) offer the best upside potential.
Sturdy Fundamentals Underscore Potential
Being a multi-brand and multi-channel retailer, Urban Outfitters offers flexible merchandising strategy. Additionally, the company has a significant domestic and international presence with rapidly expanding e-commerce activities. The company remains committed to improve comparable-store sales performance, sustain investments in direct-to-consumer business, enhance productivity in existing channels, add new brands and optimize inventory level.
We expect Urban Outfitters to witness growth on the back of new store openings, increase in direct penetration, growing wholesale operations, technology advancements and merchandising improvements. We also believe that better product execution and effective inventory management will help boost performance. Management is aggressively focusing on efforts to enhance the performance of its brands through store refurbishment and by bringing in more compelling assortments. The company is also strategically investing in shop-in-shops.
Other Stocks to Consider
Other stocks which warrant a look in the retail sector include The Children's Place, Inc. (PLCE - Free Report) , Tilly's, Inc. (TLYS - Free Report) and Central Garden & Pet Company (CENT - Free Report) . All these stocks sport the same rank as Urban Outfitters.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>