Urban Outfitters, Inc. (URBN): Investors Ready To Show Some Love After Big Buyback Announcement

Shares of apparel retailer Urban Outfitters Inc. (NASDAQ:URBN) have shed nearly half their value over the past year on repeated earnings misses and contracting margins, along with the majority of the apparel retailers that largely generate revenues by selling at physical stores.
NasdaqGS:URBN Urban Outfitters Past and Future Earnings by Simply Wall St
NasdaqGS:URBN Urban Outfitters Past and Future Earnings by Simply Wall St
But the shares have shown signs of recovery after the most recent quarterly earnings, which were higher than expected as declining sales at its stores were offset by direct-to-consumer channel. “During the first quarter we continued to see strong double-digit growth from our direct-to-consumer channel and our wholesale business,” said CEO Richard Hayne. Before the market opens this Friday, URBN appears set to post strong gains with shares trading 5% higher in the early hours. This comes on the heels of the company’s announcement of a new buyback program that entails an authorization to buy 20 million common shares, apart from nearly one million repurchase authorization remaining from the previous program, launched in Feb’15.
NasdaqGS:URBN Urban Outfitters Intrinsic value by Simply Wall St
NasdaqGS:URBN Urban Outfitters Intrinsic value by Simply Wall St
If completed, this will be a potential reduction of nearly 20% of the company’s shareholder base. And it’s coming at a time when the entire apparel retail industry is near the bottom of a trough with an enterprise value of 6.9 times core earnings against a figure of 9.1 two years ago. URBN trades at 4.5 times its core earnings. With its historically higher net income margin than the industry, a rebound in earnings can inspire confidence among value investors to consider it as a part of their portfolio. If you’re looking for stocks that tend to benefit the most from share repurchases, check out: Potential Buyback Winners