Why Urban Outfitters (URBN) is back on investor radar

Urban Outfitters (URBN) has drawn fresh attention after reporting earnings per share growth of 45% annually over the past three years and an 11% rise in revenue to about US$6.0b.

At a share price of US$69.98, Urban Outfitters has had a mixed short term run, with a 1 day share price return of 1.49% contrasted against a 30 day share price return decline of 9.18%. Its 1 year total shareholder return of 26.39% and 3 year total shareholder return of around 2.5x suggest that longer term momentum has been much stronger than recent trading implies.

If Urban Outfitters has you thinking about where else growth might be taking shape in retail and beyond, it could be a good moment to scan fast growing stocks with high insider ownership.

With EPS compounding at 45% a year, revenue at about US$6.0b, and the stock around US$69.98, the key question now is simple: is Urban Outfitters still undervalued, or is the market already pricing in future growth?

Most Popular Narrative: 18% Undervalued

At a last close of $69.98 versus a most-followed fair value estimate of about $85.25, the current price sits well below that narrative view, which leans on growth, margins and a higher future earnings multiple.

Expansion of omnichannel capabilities and e-commerce (including seamless integration of digital and in-store experiences, elevated Net Promoter Scores, and increased marketing ROI) is increasing customer engagement and driving higher online conversion, likely supporting long-term gains in sales and customer loyalty, which should benefit both revenue and margins.

Curious what kind of revenue climb and margin profile underpin that higher fair value? The narrative leans on measured growth, improving profitability and a future P/E that still sits below many peers. The full story is in the assumptions behind those earnings and the discount rate applied.

Result: Fair Value of $85.25 (UNDERVALUED)

However, you still need to factor in risks like higher tariffs pressuring margins and apparel trends shifting quickly, which could challenge those optimistic earnings assumptions.

Build Your Own Urban Outfitters Narrative

If you look at the numbers and come to a different conclusion, or simply prefer your own work, you can build a personalised view in minutes with Do it your way.

A great starting point for your Urban Outfitters research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

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If Urban Outfitters has sharpened your thinking, do not stop here. The right next idea could be waiting in a corner of the market you have not checked yet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.