Corporate Profile
"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.
Ratio Analysis
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.
| URBN | ANF | GPS | AEO | Industry | S&P 500 | |
| Price/Earnings | 22.47 | 32.20 | 17.47 | 25.09 | 20.4 | 15.3 |
| PEG | 1.32 | 1.55 | 1.68 | 2.34 | --- | --- |
| Price/Sales | 1.56 | 0.93 | 0.92 | 1.20 | 1.0 | 1.3 |
| Price/Book | 3.63 | 2.09 | 4.83 | 2.65 | 3.4 | 2.2 |
| Dividend Yield | --- | 1.54% | 1.82 | 2.28% | 1.90% | 2.10% |
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:
| Input | |
| Revenue Growth Rate (Current Year / Ongoing) | 12.2% / 3% |
| Cost of Goods Sold (COGS) | 61.3% |
| Operating Expenses | 23% |
| Tax Rate | 35.5% |
| 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.
