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Bull of the Day: Urban Outfitters (URBN)

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The retail sector has slowly found its footing in the wake of the e-commerce revolution, and just as investors were ready to declare the death of brick-and-mortar as we knew it, plenty of great stocks emerged from the special retail industry. For example, Urban Outfitters (URBN - Free Report) is an option that every investor should be aware of right now.

Urban Outfitters is a specialty retailer and wholesaler offering a variety of lifestyle merchandise to highly defined customer niches through Urban Retail stores in the United States, Canada, and Europe; an Urban Outfitters website; Anthropologie retail stores in the United States; and Free People, the company's wholesale division.

New store openings, increasing digital penetration, merchandising improvements, and international expansion have set Urban Outfitters up for success in the long term, and an improving earnings outlook and attractive valuation metrics make this Zacks Rank #1 (Strong Buy) a stock to consider right now.

Latest Outlook and Valuation

Analysts have become increasingly bullish on URBN recently. Within the past 60 days, the company has witnessed nine revisions to its current-quarter EPS estimates and 12 to its full-year EPS estimates, with 100% agreement to the upside. Urban Outfitters is now expected to post earnings growth of 36.5% in its current fiscal year.

This is likely a tailwind effect from the company’s latest earnings report, which saw Urban report positive comps at all of its brand while notching its third consecutive positive earnings surprise. Management also noted that it had seen “positive customer reaction” to its new spring offerings and was “optimistic regarding the first half of the year.”

Urban’s next earnings report is still about a month away, but things are looking up for the quarter. As mentioned, positive revisions have been pouring in, and the Zacks Consensus Estimate has moved 11 cents higher in just two months. Analysts are now expecting the company to see an EPS improvement of 123.1% from the prior-year quarter.

Meanwhile, URBN is also looking pretty cheap at its current share price levels:

Urban’s Forward P/E of just 17.0 is a discount to the broader retail sector, helping the stock earn a “B” grade for Value in our Style Scores system. The stock also has a PEG of 1.5, so investors are getting a decent price for its growth prospects as well.

Investors will also note that URBN is sporting a “B” grade in our Momentum category. This is because the stock has started to pick up the pace recently, adding about 22% over the past 12 weeks. In short, URBN looks like a great stock for traders looking to ride a share price trend that is also backed by strong analyst momentum.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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