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Urban Outfitters (URBN) Gains 26% YTD: How to Play Ahead?
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Urban Outfitters Inc. (URBN - Free Report) has experienced a remarkable jump in its stock price over the year-to-date period. The stock has rallied 25.8%, comfortably outpacing the Zacks Retail-Apparel and Shoes industry’s modest rise of 1.4%. The company's robust consumer engagement, retail expansion, digital innovation and sustainability have also helped it outperform the broader Retail-Wholesale sector and the S&P 500 index’s respective growth of 8.6% and 14.1% in the same period.
This impressive uptick has left many investors wondering if they missed out on a lucrative opportunity or if there is still potential for growth. Closing at $44.90 on Jul 24, the URBN stock is inching toward its 52-week high of $48.90 attained on Jul 12, 2024.
Technical indicators are supportive of Urban Outfitters’ strong performance. The stock is trading above both its 50-day and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in the company’s financial health and prospects.
Image Source: Zacks Investment Research
From a valuation perspective, Urban Outfitters’ shares present an attractive opportunity, trading at a discount relative to industry benchmarks. With a forward 12-month price-to-sales ratio of 0.75, below the industry’s average of 1.12, the stock offers compelling value for investors seeking exposure to the sector. Additionally, Urban Outfitters’ current Value Score of A reinforces its attractiveness, thus indicating a potentially advantageous entry point for investors.
Decoding the Tailwinds
The company is strategically set for long-term growth and market leadership through its significant initiatives, including FP Movement and Nuuly. With strong market demand and brand resonance, URBN has shown impressive performance in the first quarter of fiscal 2025. Forward-looking strategies ensure a competitive edge and enduring success.
Urban Outfitters’ total Retail segment has experienced growth, significantly driven by the Free People Group and the Anthropologie Group. Net sales in the Retail segment increased 5.8% year over year, with comparable sales rising 4.6% in the fiscal first quarter.
This growth in comparable Retail segment sales was fueled by strong high-single-digit growth in digital sales and modest low-single-digit growth in retail store sales. Notably, comparable Retail net sales increased 17.1% year over year at Free People and 10.4% at Anthropologie, demonstrating the company’s adaptability to market trends and its dedication to providing value to customers.
Nuuly, Urban Outfitters’ rental business, also showcased significant growth, adding more than 50,000 active subscribers from the fourth quarter of fiscal 2024. By the end of the fiscal first quarter, Nuuly had more than 244,000 active subscribers, with an average of more than 224,000 throughout the quarter.
Additionally, the FP Movement exemplifies Urban Outfitters’ innovative approach and strategic foresight. This initiative achieved remarkable 25% growth in the Retail segment in the fiscal first quarter, driven by strong market demand and brand loyalty. Plans for FP Movement include expanding store locations, optimizing store sizes and developing wholesale partnerships to enhance the company’s presence in the activewear market.
Looking Ahead
The company is optimistic about sustained consumer demand. It anticipates mid-single-digit total sales growth for the fiscal second quarter. URBN expects mid-single-digit comparable sales growth for Anthropologie in fiscal 2025. With a planned capital expenditure of $210 million, URBN will focus on expanding its retail footprint by opening 57 stores and investing in logistics and IT infrastructure to enhance operational efficiency.
Estimates Favoring the Stock
The Zacks Consensus Estimate for the current and next year’s sales is pegged at $5.45 billion and $5.73 billion, indicating year-over-year growth of 5.8% and 5.1%, respectively. Also, the consensus estimate for the current and next year’s earnings per share is pegged at $3.57 and $3.94, implying year-over-year growth of 9.9% and 10.1%, respectively. This consistent growth trend is generally a favorable sign, indicating the company’s ability to generate higher revenues and profit, which could lead to increased investor confidence and potentially higher stock valuations.
Wrapping Up
Urban Outfitters presents a compelling investment opportunity due to its strong consumer engagement, innovative retail strategies and digital advancements. Its strategic growth initiatives, including FP Movement and Nuuly, along with attractive valuation metrics and consistent financial performance, signal continued upward momentum and long-term potential. The company currently carries a Zacks Rank #1 (Strong Buy).
Gap is a premier international specialty retailer that offers a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 22.4% and 0.2%, respectively, from fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Stitch Fix is a leading online personal styling service. It currently has a Zacks Rank of 1.
The Zacks Consensus Estimate for Stitch Fix’s fiscal 2024 earnings indicates growth of 22.6% from the year-ago actuals. SFIX has a trailing four-quarter average earnings surprise of 14.5%.
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Urban Outfitters (URBN) Gains 26% YTD: How to Play Ahead?
Urban Outfitters Inc. (URBN - Free Report) has experienced a remarkable jump in its stock price over the year-to-date period. The stock has rallied 25.8%, comfortably outpacing the Zacks Retail-Apparel and Shoes industry’s modest rise of 1.4%. The company's robust consumer engagement, retail expansion, digital innovation and sustainability have also helped it outperform the broader Retail-Wholesale sector and the S&P 500 index’s respective growth of 8.6% and 14.1% in the same period.
This impressive uptick has left many investors wondering if they missed out on a lucrative opportunity or if there is still potential for growth. Closing at $44.90 on Jul 24, the URBN stock is inching toward its 52-week high of $48.90 attained on Jul 12, 2024.
Technical indicators are supportive of Urban Outfitters’ strong performance. The stock is trading above both its 50-day and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in the company’s financial health and prospects.
Image Source: Zacks Investment Research
From a valuation perspective, Urban Outfitters’ shares present an attractive opportunity, trading at a discount relative to industry benchmarks. With a forward 12-month price-to-sales ratio of 0.75, below the industry’s average of 1.12, the stock offers compelling value for investors seeking exposure to the sector. Additionally, Urban Outfitters’ current Value Score of A reinforces its attractiveness, thus indicating a potentially advantageous entry point for investors.
Decoding the Tailwinds
The company is strategically set for long-term growth and market leadership through its significant initiatives, including FP Movement and Nuuly. With strong market demand and brand resonance, URBN has shown impressive performance in the first quarter of fiscal 2025. Forward-looking strategies ensure a competitive edge and enduring success.
Urban Outfitters’ total Retail segment has experienced growth, significantly driven by the Free People Group and the Anthropologie Group. Net sales in the Retail segment increased 5.8% year over year, with comparable sales rising 4.6% in the fiscal first quarter.
This growth in comparable Retail segment sales was fueled by strong high-single-digit growth in digital sales and modest low-single-digit growth in retail store sales. Notably, comparable Retail net sales increased 17.1% year over year at Free People and 10.4% at Anthropologie, demonstrating the company’s adaptability to market trends and its dedication to providing value to customers.
Nuuly, Urban Outfitters’ rental business, also showcased significant growth, adding more than 50,000 active subscribers from the fourth quarter of fiscal 2024. By the end of the fiscal first quarter, Nuuly had more than 244,000 active subscribers, with an average of more than 224,000 throughout the quarter.
Additionally, the FP Movement exemplifies Urban Outfitters’ innovative approach and strategic foresight. This initiative achieved remarkable 25% growth in the Retail segment in the fiscal first quarter, driven by strong market demand and brand loyalty. Plans for FP Movement include expanding store locations, optimizing store sizes and developing wholesale partnerships to enhance the company’s presence in the activewear market.
Looking Ahead
The company is optimistic about sustained consumer demand. It anticipates mid-single-digit total sales growth for the fiscal second quarter. URBN expects mid-single-digit comparable sales growth for Anthropologie in fiscal 2025. With a planned capital expenditure of $210 million, URBN will focus on expanding its retail footprint by opening 57 stores and investing in logistics and IT infrastructure to enhance operational efficiency.
Estimates Favoring the Stock
The Zacks Consensus Estimate for the current and next year’s sales is pegged at $5.45 billion and $5.73 billion, indicating year-over-year growth of 5.8% and 5.1%, respectively. Also, the consensus estimate for the current and next year’s earnings per share is pegged at $3.57 and $3.94, implying year-over-year growth of 9.9% and 10.1%, respectively. This consistent growth trend is generally a favorable sign, indicating the company’s ability to generate higher revenues and profit, which could lead to increased investor confidence and potentially higher stock valuations.
Wrapping Up
Urban Outfitters presents a compelling investment opportunity due to its strong consumer engagement, innovative retail strategies and digital advancements. Its strategic growth initiatives, including FP Movement and Nuuly, along with attractive valuation metrics and consistent financial performance, signal continued upward momentum and long-term potential. The company currently carries a Zacks Rank #1 (Strong Buy).
Other Solid Picks
Other top-ranked stocks in the retail space are The Gap, Inc. (GPS - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Stitch Fix (SFIX - Free Report) .
Gap is a premier international specialty retailer that offers a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 22.4% and 0.2%, respectively, from fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Stitch Fix is a leading online personal styling service. It currently has a Zacks Rank of 1.
The Zacks Consensus Estimate for Stitch Fix’s fiscal 2024 earnings indicates growth of 22.6% from the year-ago actuals. SFIX has a trailing four-quarter average earnings surprise of 14.5%.