Urban Hits New 52-Week High - Analyst Blog
January 21 2013 - 7:30AM
Zacks
Strong holiday sales results
facilitated Urban Outfitters Inc. (URBN) to attain
a new 52-week high of $43.46 on Friday, before closing at $43.39.
Moreover, shares of this Zacks Rank #2 (Buy) company has generated
a solid return of approximately 72.9% in the past one year.
Drivers that Triggered
Momentum
Urban Outfitters posted sturdy
sales results for the key holiday season. The company stated that
net sales for the two months period ended Dec 31, 2012, jumped 15%
year over year to $666 million. Comparable retail segment net
sales, including comparable direct-to-consumer channel, escalated
9%, reflecting robust sales across all brands.
Comparable retail segment net sales
jumped 33% at Free People, while it rose by 10% and 5% at Urban
Outfitters and Anthropologie, respectively. Net sales at
Direct-to-consumer increased 38%, while the wholesale segment
marked an elevation of 21% in net sales for the period.
Moreover, for the 11-month period
ended Dec 31, 2012, total net sales surged 12% year over year to
$2.6 billion, while comparable retail segment net sales increased
6%. The company stated that comparable-store net sales edged down
1%, while Direct-to-consumer net sales soared 29%. Wholesale
segment marked an increase of 11% in net sales during the
period.
Besides Urban Outfitters, other
apparel and accessories retailers like Francesca’s Holding
Corp (FRAN), Gap Inc. (GPS) and
Macy’s Inc. (M) recorded strong sales in the
holiday season.
Urban Outfitters, being a
multi-brand and multi-channel retailer, offers flexible
merchandising strategy. The company also has a significant domestic
and international presence with rapidly expanding e-Commerce
activities.
Going forward, the company remains
committed to improve comparable-store sales performance, sustain
investments in direct-to-consumer business, enhance productivity in
existing channels, add new brands and optimize inventory
levels.
Stock’s Key
Indicators
From the valuation perspective,
Urban Outfitters currently trades at a forward P/E of 26.93x, well
above the peer group average of 13.32x. However, given the debt
free balance sheet and strong fundamentals, the stocks’ premium
valuation is justified. Moreover, the company’s return-on-equity
(ROE) and return-on-asset (ROA) of 16.8% and 12.1%, respectively,
are higher than the peer group averages. The company’s strong
fundamentals are well supported by its long-term estimated EPS
growth rate of 18.3%.
FRANCESCAS HLDG (FRAN): Free Stock Analysis Report
GAP INC (GPS): Free Stock Analysis Report
MACYS INC (M): Free Stock Analysis Report
URBAN OUTFITTER (URBN): Free Stock Analysis Report
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