Why Urban Outfitters at 9.86X P/E Might Be Your Next Value Pick

Urban Outfitters Inc. URBN is currently trading at a notable low price-to-earnings (P/E) multiple, which is well 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 9.86, URBN is priced lower than the industry average of 16.20 and the sector average of 23.92.This makes the URBN stock undervalued relative to its industry peers, presenting an attractive opportunity for investors seeking exposure to the retail apparel sector. Furthermore, URBN's Value Score of A underscores its appeal as a potential investment. Image Source: Zacks Investment Research The stock has gained 4.2%, outperforming the industry’s 1.2% decline in the past month. Closing at $38.22 on Friday, Urban Outfitters’ stock is currently trading 21.8% below its 52-week high of $48.90 attained on July 12, 2024. Image Source: Zacks Investment Research URBN’s Multi-Brand Portfolio & Omnichannel StrategyUrban Outfitters continues to demonstrate strong growth by utilizing its diverse multi-brand portfolio to broaden its revenue sources. In the second quarter of fiscal 2025, URBN achieved a 6.3% year-over-year increase in total sales, reaching $1.35 billion. This growth is particularly notable in a challenging retail landscape, highlighting the company's strategic expertise.The Retail segment saw a 2% increase in comparable sales, driven by robust performances from Anthropologie and Free People. The Wholesale segment also showed strong results, with a 15.1% rise in revenues, underscoring the company's focus on full-price sales to maintain brand integrity.URBN's subscription rental service, Nuuly, reported an impressive 62.6% revenue increase, driven by a 55% rise in subscribers, now exceeding 250,000. This growth resulted in a record operating profit of $5.3 million. Nuuly's performance underscores URBN's ability to innovate in the fashion rental market and capitalize on changing consumer preferences for sustainable and flexible fashion options.The Anthropologie Group marked its 14th consecutive quarter of growth, posting a 7.4% increase in net sales. Retail comps rose by 6.7%, fueled by strong demand for women’s apparel. Urban Outfitters plans to open 57 new stores and close about 25, focusing on key brands like Free People and Anthropologie, demonstrating its commitment to sustainable expansion.Moreover, URBN’s broader strategy involves leveraging its omnichannel capabilities, as customers who engage across multiple channels tend to spend more. The company is investing in digital platforms and social media to drive traffic and improve the customer experience. Also, strategic inventory management and disciplined expense control are expected to support margin improvements.Estimate Favoring URBN StockAnalysts have responded positively to Urban Outfitters’ prospects, reflected in upward revisions in the Zacks Consensus Estimate for earnings per share. In the past seven days, analysts have increased their estimates for the current fiscal year by 2 cents. The consensus estimate for earnings is pegged at $3.65 per share.Also, the consensus estimate for the next fiscal year has also been raised by a penny to $3.93 per share. The Zacks Consensus Estimate for the current and next fiscal year’s sales is pegged at $5.45 billion and $5.73 billion, indicating year-over-year growth of 5.8% and 5.1%, respectively.Find the latest EPS estimates and surprises on Zacks Earnings Calendar. Image Source: Zacks Investment Research ConclusionInvestors may find Urban Outfitters stock attractive due to its undervaluation compared to industry peers, with a lower price-to-earnings ratio. The company has demonstrated solid growth, driven by strong performances from key brands like Anthropologie and Free People, along with the successful expansion of its Nuuly rental service. URBN's focus on omnichannel retailing and strategic store openings also positions it for continued success. With analysts raising earnings estimates, URBN offers compelling value for those looking to invest in a growing, innovative retailer. The company currently carries a Zacks Rank #2 (Buy).Key PicksOther top-ranked stocks are Abercrombie & Fitch Co. ANF, Gildan Activewear Inc. GIL and Steven Madden, Ltd. SHOO.Abercrombie is a specialty retailer of premium, high-quality casual apparel. It carries a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.ANF delivered a 16.8% earnings surprise in the last reported quarter.The Zacks Consensus Estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 64.2% and 13.2%, respectively, from the fiscal reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.Gildan is a manufacturer and marketer of premium quality branded basic activewear for sale principally in the wholesale imprinted activewear segment of the North American apparel market. It currently carries a Zacks Rank #2.The consensus estimate for Gildan’s current financial-year earnings and sales indicates growth of 15.6% and 1.5%, respectively, from the 2023 figures. GIL has a trailing four-quarter average earnings surprise of 5.4%.Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank of 2.The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 8.2% and 13.4%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.8%.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 Urban Outfitters, Inc. (URBN): Free Stock Analysis Report Gildan Activewear, Inc. (GIL): Free Stock Analysis Report Steven Madden, Ltd. (SHOO): 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