Here's What The Buy Side Expects From Urban Outfitters Monday

Mar. 7.14 | About: Urban Outfitters, (URBN)

Urban Outfitters Inc. (NASDAQ:URBN) is set to report FQ4 2014 earnings after the market closes on Monday, March 10th. Urban Outfitters is an American retail clothing company that operates over 400 stores across 5 brands, including American Outfitters, Anthropologie, Free People, Terrain, and BHLDN. Retail sales have been broadly weak this winter as many retail companies have blamed snowstorms and the extreme cold for reduced customer turnout and fewer sales. Over the past 4 months, expectations for Urban Outfitter’s FQ4 report have deteriorated alongside the broad retail slack. Here’s what investors are now expecting from Urban Outfitters on Monday.

The information below is derived from data submitted to the platform by a set of Buy Side and Independent analyst contributors.image

(Click Here to see Estimates and Interactive Features for Urban Outfitters)

The current Wall Street consensus expectation is for URBN to report 55c EPS and $910.83M revenue, while the current consensus from Buy Side and Independent contributing analysts is 55c EPS and $918.51M in revenue. This quarter, the buy-side as represented by the community is expecting Urban Outfitters to match the Wall Street consensus on EPS, but beat by a small margin on sales.

Over the previous 6 quarters, the consensus from was more accurate than Wall Street in forecasting Urban Outfitters’ EPS and revenue 2 and 4 times, respectively. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market’s actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case, we are seeing a small differential between the two groups.image

The distribution of estimates published by analysts on the platform range from 50c to 60c EPS and $906.00M to $944.85M in revenues. This quarter, we’re seeing a wide distribution of estimates for Urban Outfitters.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signaling less agreement in the market, which could mean greater volatility post earnings. image

Over the past 4 months, the Wall Street EPS consensus decreased from 63c to 55c, while the Estimize consensus also slipped down to 55c from 56c at the end of the quarter. Meanwhile, the Wall Street revenue forecast also fell from $943.85M to $910.83M, while the Estimize forecast dropped from $933.28M to $918.51M. Timeliness is correlated with accuracy and downward analyst revisions at the end of the quarter are often a bearish indicator.image

The analyst with the highest estimate confidence rating this quarter is Niners49, who projects 56c EPS and $913.83M in revenue. In the Winter 2014 season, Niners49 is rated as the 163rd best analyst and is ranked 315th overall among over 3,950 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research that looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case, Niners49 is expecting Urban Outfitters to beat the Estimize community consensus on EPS but come up slightly short on sales.

While retail sales have been weak across the board and expectations for Urban Outfitters have fallen significantly throughout the quarter, contributing analysts on the platform are still expecting the company to beat the consensus from Wall Street. Despite reduced expectations and the harsh weather, the Estimize community still expects Urban Outfitters to report 7% increased revenue compared to FQ4 last year. If URBN can beat the $918.51M sales target from the Estimize community, strength in the face of a weak retail retail environment could give shares a boost.

Disclosure: None