Back to top

Image: Bigstock

How is Urban Outfitters (URBN) Placed Ahead of Q1 Earnings?

Read MoreHide Full Article

We expect Urban Outfitters, Inc. (URBN - Free Report) to register year-over-year growth in its top and bottom-line performances when it releases first-quarter fiscal 2022 results on May 25. The Zacks Consensus Estimate for the quarterly earnings currently stands at 16 cents, implying a significant reversal of the year-ago quarter’s reported loss of $1.31 per share. Moreover, the consensus mark has moved north by a couple of cents in the past 30 days.

However, a glance at this specialty lifestyle products retailer’s performance in the trailing four quarters shows that it witnessed a negative earnings surprise of 31.1%, on average.
 
Nonetheless, the consensus estimate for quarterly revenues is currently pegged at $897.8 million, indicating an improvement of about 53% from the year-ago period’s recorded number.

Key Aspects to Note

Urban Outfitters’ quarterly performance most likely benefited from its store-rationalization efforts, technological advancements and merchandising improvements. The company is witnessing a steady upsurge in digital sales across Europe. Additionally, its Free People brand has been exhibiting strength amid the pandemic. Furthermore, Urban Outfitters’ strategic growth initiative FP Movement bodes well. It is constantly making investments in the Movement with the digital and creative brand prospects, which is likely to boost growth. Also, its AnthroLiving initiative has been encouraging.

On the company’s last earnings call on Mar 2, management cited that both the Anthropologie and Urban Outfitters brands continued to gain from solid home sales in February. Further, management projected a sales increase of low single-digit year over year including the Retail segment sales growth in low single digits for the quarter under review. Further, the company anticipated total company Retail segment comparable-store sales to be positive for the fiscal first quarter.

On the flip side, management forecasted a sales decline at the Wholesale segment in low double digits for the quarter to be reported. It also projected first-quarter gross margin to contract year over year on deleveraged delivery and logistics expenses stemming from the increased penetration of digital channels into the overall business. Also, elevated freight costs remain headwinds. Moreover, the company expected SG&A expense to rise in the low single-digit range for the to-be-reported quarter.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Urban Outfitters this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Urban Outfitters, Inc. Price and EPS Surprise

Urban Outfitters, Inc. Price and EPS Surprise

Urban Outfitters, Inc. price-eps-surprise | Urban Outfitters, Inc. Quote

Urban Outfitters currently has a Zacks Rank #3 and an Earnings ESP of +18.32%.

More Stocks With Favorable Combination

Here are a few other companies worth considering from the same sector as our model shows that these too have the right combination of elements to beat on earnings:

Abercrombie & Fitch (ANF - Free Report) currently has an Earnings ESP of +43.82% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General (DG - Free Report) presently has an Earnings ESP of +1.27% and is Zacks #3 Ranked.

Dollar Tree (DLTR - Free Report) has an Earnings ESP of +1.40% and a Zacks Rank of 3 at present.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>