"Urban Outfitters, Inc. (URBN) is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through Urban Outfitters stores in the United States, Canada, and Europe, catalogs and websites; Anthropologie stores in the United States, Canada and Europe, catalogs and websites; Free People wholesale, which sells its product to approximately 1,400 specialty stores and select department stores; Free People stores, catalogs and website; Terrain garden center and website and a BHLDN website. " - URBN.com
Urban Outfitters reports earnings on May 21st after the markets close and will hold a earnings conference call at 5pm.
Current Analyst Estimates
The consensus analyst estimate for the company's Q1 2013 earnings are for earnings of $0.20/share and revenues of $578.52 million. The earnings estimates from the 30 analysts covering the stock range between $0.15/share and $0.25/share while the revenue estimates range between $556.5 million and $603 million. The Q1 2013 earnings estimate represents a decrease of 13% over a year ago while revenue comes in at an increase of 10.4% over the same quarter one year ago.
Analyst Consensus Estimate Trend
Consensus analyst estimates have been decreased slightly over the past 3 months ago consensus estimates were for $0.22/share.
Current Analyst Price Targets
Since the beginning of the 2012 calendar year analysts have had mixed opinions on URBN. 2 firms, Robert W. Baird (Jan 7th) and Brean Murray (Feb. 11th), have downgraded the stock with price targets of $28 and $23 respectively. Janney Montgomery Scott gave the company an upgrade to Buy with a price target of $31 and most recently (March 13th), Barclay's Capital reiterated their overweight rating on the stock while maintaining a $35 price target.
To get a sense of the current valuation with respect to its competitors, below is the ratio analysis for Urban Outfitters compared to the ratios of its chief competitors, Abercrombie & Fitch (ANF), The Gap (GPS), American Eagle Outfitters (AEO) as well as the industry and S&P 500 averages.
Fair Value Analysis
The valuation of discounted cash flows is an effective tool in identifying the intrinsic value for well established companies. The input for the analysis is as follows:
|Revenue Growth Rate (Current Year / Ongoing)||12.2% / 3%|
|Cost of Goods Sold (COGS)||61.3%|
|Weighted Average Cost of Capital (WACC)||10%|
Urban Outfitters has been consistent when it comes to managing expenses and the costs of goods sold. The inputs for the fair value analysis are derived from the 5 year averages for the company. The only exception is for revenue growth. Currently analysts expect revenue growth for next year of 12.2% and 11% the following year. To preserve the conservative nature of the fair value analysis on going growth in revenues for the years following is reduced to 3% annually. As a result, the estimated fair value for URBN stock is $27.62. This places the current valuation of 26.81 at a 3.02% discount to fair value.
Fundamental Data complied from:
MorningStar, FinViz, TDAmeritrade
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.