Why Urban Outfitters (URBN) Stock is Up Today

NEW YORK (TheStreet) -- Urban Outfitters (URBN) was gaining 2.3% to $38.15 Wednesday following comments at its annual investor day.

During a presentation, the company said it plans to double its total sales by 2020.

Urban Outfitters management said that the home category currently accounts for 17% of sales, and it hopes to increase that percentage to 22% by 2020. To reach that goal, the company will refocus its Anthropologie on home furnishings, cutting the brand's apparel to 50% from 70% of its offerings, according to Barron's.

Read more: Urban Outfitters' Analyst Day: What Wall Street's Saying

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

"The plan for the home category is to make it a destination to outfit entire rooms (versus the prior focus on accent pieces and gifting), and the new registry service (soft-launched last week with a strong response from customers) aligns nicely with both the broadened home assortment and the BHLDN bridal sub-brand," according to Sterne Agee analyst Ike Boruchow.

TheStreet Ratings team rates URBAN OUTFITTERS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate URBAN OUTFITTERS INC (URBN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, notable return on equity, 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 analysis by TheStreet Ratings Team goes as follows:

  • URBN's revenue growth has slightly outpaced the industry average of 0.0%. Since the same quarter one year prior, revenues slightly increased by 7.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • URBAN OUTFITTERS INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, URBAN OUTFITTERS INC increased its bottom line by earning $1.89 versus $1.61 in the prior year. This year, the market expects an improvement in earnings ($1.93 versus $1.89).
  • URBN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.88 is somewhat weak and could be cause for future problems.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, URBAN OUTFITTERS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • 41.62% 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, URBN's net profit margin of 8.32% compares favorably to the industry average.
  • You can view the full analysis from the report here: URBN Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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