URBN at 14.15X P/E Might Be Your Next Value Play Stock: Here's Why

Urban Outfitters Inc. URBN is currently trading at a notable low price-to-earnings (P/E) multiple, below the averages of the Zacks Retail-Apparel and Shoes industry and the broader Retail-Wholesale sector. With a forward 12-month P/E of 14.15X, URBN is priced lower than the industry average of 19.89X and the sector average of 26.15X. This undervaluation highlights its potential for investors seeking attractive entry points to the retail apparel sector.URBN Looks Attractive From a Valuation Standpoint Image Source: Zacks Investment Research This distinguished global fashion entity ended Friday’s trading session at $55.42, above its 50 and 200-day simple moving averages (SMAs) of $52.21 and $43.05, respectively, highlighting a continued uptrend. This technical strength, combined with consistent momentum, indicates positive market sentiment, and investor confidence in URBN’s financial stability and growth potential.URBN Trades Above 50 & 200-Day Moving Averages Image Source: Zacks Investment Research Shares of the company are currently trading 9% below its 52-week high of $60.90 reached on Jan. 22, 2025, making investors contemplate their next moves. In the past three months, the URBN stock has gained 53.6% compared with the industry’s 26.7% growth. The company’s strategic initiatives and operational efficiency have enabled it to outperform the broader sector and the S&P 500 index’s growth of 12.9% and 7.1%, respectively, at the same time frame.URBN Stock Past Three-Month Performance Image Source: Zacks Investment Research Key Factors Contributing to Urban Outfitters' GrowthAnthropologie continues to be a major driver of URBN's success, benefiting from robust sales across both physical stores and online platforms. The brand effectively attracts and retains customers through its innovative products and targeted marketing strategies. Its ability to enhance customer acquisition demonstrates its responsiveness to evolving consumer preferences.Nuuly, Urban Outfitters’ rental service, is positioned for growth, backed by a growing subscriber base and strategic collaborations. The addition of digital features, coupled with expanded fulfillment capacity, strengthens Nuuly’s foothold in the expanding rental market. This strong foundation offers optimism for its future in the multi-billion-dollar sector.Free People has performed strongly in both its retail and wholesale segments, driven by its emphasis on functional and stylish activewear. The success of its FP Movement line has resonated well with its target market. Free People's expansion strategy reflects confidence in sustaining its success within the company’s portfolio.Urban Outfitters thrives through its efficient pricing, inventory management and the seamless integration of digital and physical retail. The company effectively adapts to changing consumer behavior while preserving profitability, ensuring its competitiveness in the rapidly evolving retail environment.URBN’s Holiday Sales Growth Across Digital & WholesaleThe company recorded a 10% year-over-year increase in total net sales for the two months ending Dec. 31, 2024. The Retail segment’s net sales rose 7%, with comparable sales moving up 6%. This growth in comparable sales was primarily fueled by a strong digital performance, which saw high-single-digit gains, while retail store sales experienced low-single-digit growth. Within the Retail segment, Anthropologie and Free People posted year-over-year comparable net sales increases of 10% and 9%, respectively, whereas Urban Outfitters declined 4%. FP Movement achieved remarkable 23% year-over-year growth in comparable net sales, while the broader Free People brand saw a more moderate 6% increase. Nuuly demonstrated significant expansion, with net sales jumping 55%, driven by a 53% rise in the average number of active subscribers from the previous year.The Wholesale segment also delivered strong results, with net sales climbing 29% year over year, largely attributed to increased Free People wholesale sales, particularly from specialty retailers and department stores.Here's How Estimates Stack Up for URBNThe positive sentiment surrounding Urban Outfitters is reflected in the upward revisions of the Zacks Consensus Estimate for earnings per share. In the past 30 days, analysts have increased their estimates for the fourth quarter, resulting in an upward revision of 2 cents to 89 cents. The consensus estimate for earnings for the current fiscal year has also advanced by 3 cents to $3.92 per share. This indicates year-over-year growth of 29% and 20.6%, respectively.Find the latest EPS estimates and surprises on Zacks Earnings Calendar. Image Source: Zacks Investment Research Final Words on Urban OutfittersInvestors may consider URBN due to its attractive undervaluation compared with industry peers and strong market momentum. The company’s growth drivers, including successful brands like Anthropologie, Free People and Nuuly, along with robust digital and wholesale channels, highlight its resilience and adaptability.URBN’s ability to maintain profitability amid shifting consumer trends, along with upward earnings estimate revisions, suggests significant growth potential, making it a promising investment opportunity in the retail sector. The company currently sports a Zacks Rank #1 (Strong Buy).Other Key PicksSome other top-ranked stocks are Abercrombie & Fitch Co. ANF, lululemon athletica inc. LULU and Deckers Outdoor Corporation DECK.Abercrombie is a specialty retailer of premium, high-quality casual apparel. It has a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 69.4% and 15.1%, respectively, from the fiscal 2024 reported levels. ANF delivered a trailing four-quarter average earnings surprise of 14.8%.lululemon is a yoga-inspired athletic apparel company that creates lifestyle components. It presently has a Zacks Rank #2.The Zacks Consensus Estimate for LULU’s fiscal 2025 earnings and sales indicates growth of 12.5% and 9.7%, respectively, from the fiscal 2024 reported figures. LULU delivered a trailing four-quarter average earnings surprise of 6.7%.Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It carries a Zacks Rank of 2 at present.The Zacks Consensus Estimate for DECK’s fiscal 2025 earnings and sales implies growth of 15.6% and 14.3%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 36.8%.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Abercrombie & Fitch Company (ANF): Free Stock Analysis Report Deckers Outdoor Corporation (DECK): Free Stock Analysis Report Urban Outfitters, Inc. (URBN): Free Stock Analysis Report lululemon athletica inc. (LULU): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks