Rating Change #5
Urban Outfitters Inc
has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- URBN's revenue growth has slightly outpaced the industry average of 8.2%. Since the same quarter one year prior, revenues slightly increased by 8.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.14 is sturdy.
- Net operating cash flow has significantly increased by 109.92% to $42.07 million when compared to the same quarter last year. In addition, URBAN OUTFITTERS INC has also vastly surpassed the industry average cash flow growth rate of 1.58%.
- 40.50% is the gross profit margin for URBAN OUTFITTERS INC which we consider to be strong. Regardless of URBN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.00% trails the industry average.
- URBAN OUTFITTERS INC reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, URBAN OUTFITTERS INC reported lower earnings of $1.18 versus $1.61 in the prior year. This year, the market expects an improvement in earnings ($1.47 versus $1.18).
Urban Outfitters Inc. operates lifestyle specialty retail stores under the Urban Outfitters, Anthropologie, Free People, Terrain, and BHLDN brand names in the United States, Canada, and Europe. The company has a P/E ratio of 25.7, equal to the average retail industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Urban Outfitters has a market cap of $4.43 billion and is part of the
industry. Shares are up 11% year to date as of the close of trading on Thursday.
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