Urban Outfitters (URBN) Stock Rallying Following Higher Rating

NEW YORK (TheStreet) -- Shares of Urban Outfitters Inc (URBN) were rallying, up 1.36% to $35.53 in pre-market trading Friday, after analysts at BB&T Capital Markets upgraded the apparel retailer to "buy" from "hold" earlier this morning.

The firm cited the pullback in shares for the higher rating.

BB&T analysts believe that the worries of a slowdown at the company's Anthropologie unit are "overblown."

Urban Outfitters is a Philadelphia-based lifestyle specialty retail company, operating under the Urban Outfitters, Anthropologie, Free People, Terrain and BHLDN brands known for a range of eclectic merchandise.

The company sells women's and men's fashion apparel, footwear and accessories as well as a mix of apartment wares and gifts.

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

"We rate URBAN OUTFITTERS INC (URBN) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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 and increase in stock price during the past year. We feel its 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:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.1%. Since the same quarter one year prior, revenues slightly increased by 7.7%. 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.
  • 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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.02, which illustrates the ability to avoid short-term cash problems.
  • URBAN OUTFITTERS INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, URBAN OUTFITTERS INC reported lower earnings of $1.70 versus $1.89 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $1.70).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness 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.
  • You can view the full analysis from the report here: URBN Ratings Report

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