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Urban Outfitters

Nasdaq:URBN
Snowflake Description

Flawless balance sheet and overvalued.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
URBN
Nasdaq
$4B
Market Cap
  1. Home
  2. US
  3. Retail
2018/01/19
Company description

Urban Outfitters, Inc. engages in the retail and wholesale of general consumer products. More info.


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3 Month History
URBN
Industry
5yr Volatility vs Market

Value

 Is Urban Outfitters undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Urban Outfitters to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

Current Discount
Amount off the current price Urban Outfitters is available for.
Intrinsic value
29%
Share price is $33.84 vs Future cash flow value of $47.34
Current Discount Checks
For Urban Outfitters to be considered undervalued it must be available for at least 20% below the current price. Less than 40% is even better.
  • Urban Outfitters's share price is below the future cash flow value, and at a moderate discount (> 20%).
  • Urban Outfitters's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Urban Outfitters's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Urban Outfitters's earnings available for a low price, and how does this compare to other companies in the same industry?
  • Urban Outfitters is overvalued based on earnings compared to the US Specialty Retail industry average.
  • Urban Outfitters is overvalued based on earnings compared to the US market.
Price based on expected Growth
Does Urban Outfitters's expected growth come at a high price?
  • Urban Outfitters is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on Urban Outfitters's assets?
  • Urban Outfitters is overvalued based on assets compared to the US Specialty Retail industry average.
X
Value checks
We assess Urban Outfitters's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Specialty Retail industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Specialty Retail industry average (and greater than 0)? (1 check)
  5. Urban Outfitters has a total score of 1/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (18.29%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (2 Stage Free Cash Flow to Equity)

The calculations below outline how an intrinsic value for Urban Outfitters is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
$1,157

Terminal Value

Terminal Value = FCF2022 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $351 × (1 + 2.47%) ÷ (8.49% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$5,964

Present value of terminal value:
$3,967

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$5,124 = $1,157 + $3,967

Value = Total value / Shares Outstanding ($5,124 / 108)

Discount to Share Price

Value per share:
$47.34

Current discount (share price of $33.84): 28.51%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 8.49% = 2.47% + (0.8 * 7.53%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($3,663,128,258).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

0.789 = 0.789 (1 + (1- 35%) (0%))

Levered Beta used in calculation = 0.8



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in USD.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (7.53%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is Urban Outfitters expected to perform in the next 1 to 3 years based on estimates from 23 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
9.1%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is Urban Outfitters expected to grow at an attractive rate?
  • Urban Outfitters's earnings growth is expected to exceed the low risk savings rate of 4.5%.
Growth vs Market Checks
  • Urban Outfitters's earnings growth is positive but not above the US market average.
  • Urban Outfitters's revenue growth is positive but not above the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • Urban Outfitters's earnings are expected to grow by 9.1% yearly, however this is not considered high growth (20% yearly).
  • Urban Outfitters's revenue is expected to grow by 3.2% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • Urban Outfitters is not expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be below 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be above the current US Specialty Retail industry average.
  • An improvement in Urban Outfitters's performance (ROE) is expected over the next 3 years.
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Future performance checks
We assess Urban Outfitters's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the US market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the US market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Urban Outfitters has a total score of 1/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has Urban Outfitters performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare Urban Outfitters's growth in the last year to its industry (Specialty Retail).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • Urban Outfitters's year on year growth rate is negative over the past 5 years and the most recent earnings are below average.
  • Urban Outfitters's 1 year earnings growth is negative, it can't be compared to the 5 year average.
  • Urban Outfitters's 1 year earnings growth is negative, it can't be compared to the US Specialty Retail industry average.
Earnings and Revenue History
Urban Outfitters's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Poor return on shareholders funds (ROE < 20%) last year.
  • Urban Outfitters performed above the US Specialty Retail industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) has been diminishing over 3 years.
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Past performance checks
We assess Urban Outfitters's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Specialty Retail industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
Urban Outfitters has a total score of 1/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is Urban Outfitters's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Urban Outfitters's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Urban Outfitters is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • Urban Outfitters's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of Urban Outfitters's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • High level of stock/ inventory/ unsold assets.
  • Urban Outfitters has no debt, it does not need to be covered by total short term assets.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • Urban Outfitters has no debt.
X
Financial health checks
We assess Urban Outfitters's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. Urban Outfitters has a total score of 6/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is Urban Outfitters's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
0%
Current annual income from Urban Outfitters dividends.
If you bought $2,000 of Urban Outfitters shares you are expected to receive $0 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Not paying a dividend.
  • Not paying a dividend.
Annualized Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Not paying a notable dividend.
  • Not paying a notable dividend.
Current Payout to shareholders
What portion of Urban Outfitters's earnings are paid to the shareholders as a dividend.
  • Not paying a notable dividend.
Future Payout to shareholders
  • Insufficient estimate data to determine if a dividend will be paid in 3 years.
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Income/ dividend checks
We assess Urban Outfitters's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can Urban Outfitters afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. Urban Outfitters has a total score of 0/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of Urban Outfitters's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Richard Hayne, image provided by Google.
Richard Hayne
COMPENSATION $369,473
AGE 69
TENURE AS CEO 6 years
CEO Bio

Mr. Richard A. Hayne co-founded Urban Outfitters, Inc. in 1970 and has been its Chief Executive Officer since January 10, 2012. Mr. Hayne served as the President of Urban Outfitters, Inc. from 1976 to February 25, 2016 and served as its Principal Executive Officer until May 22, 2007. Mr. Hayne has been the Chairman and a Director of Urban Outfitters, Inc. since incorporation in 1976. He has been a Director of UK Group Finance Holdco Limited since January 5, 2016. He is a graduate of Lehigh University.

CEO Compensation
  • Richard's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.
  • Richard's compensation appears reasonable.
Management Team Tenure

Average tenure and age of the Urban Outfitters management team in years:

9.2
Average Tenure
54.4
Average Age
  • The average tenure for the Urban Outfitters management team is over 5 years, this suggests they are a seasoned and experienced team.
Management Team

Richard Hayne

TITLE
Co-Founder
COMPENSATION
$369K
AGE
69
TENURE
6 yrs

David McCreight

TITLE
President & CEO of Anthropologie Group
COMPENSATION
$8M
AGE
54
TENURE
1.9 yrs

Scott Belair

TITLE
Co-Founder & Director
COMPENSATION
$246K
AGE
70
TENURE
48 yrs

Frank Conforti

TITLE
Chief Financial Officer
COMPENSATION
$2M
AGE
41
TENURE
5.8 yrs

Calvin Hollinger

TITLE
Chief Operating Officer
COMPENSATION
$2M
AGE
52
TENURE
2.3 yrs

Meg Hayne

TITLE
Chief Creative Officer
COMPENSATION
$538K
AGE
59
TENURE
4.2 yrs

Trish Donnelly

TITLE
Chief Executive Officer of Urban Outfitters Group
COMPENSATION
$2M
AGE
50
TENURE
1.9 yrs

Oona McCullough

TITLE
Director of Investor Relations

Azeez Hayne

TITLE
General Counsel & Corporate Secretary
AGE
40
TENURE
2.6 yrs

Wendy Brown

TITLE
Chief Operating Officer of the Anthropologie Division
TENURE
10 yrs
Board of Directors Tenure

Average tenure and age of the Urban Outfitters board of directors in years:

18.1
Average Tenure
61.5
Average Age
  • The average tenure for the Urban Outfitters board of directors is over 10 years, this suggests they are a seasoned and experienced board.
Board of Directors

Richard Hayne

TITLE
Co-Founder
COMPENSATION
$369K
AGE
69
TENURE
42 yrs

Scott Belair

TITLE
Co-Founder & Director
COMPENSATION
$246K
AGE
70
TENURE
42 yrs

Meg Hayne

TITLE
Chief Creative Officer
COMPENSATION
$538K
AGE
59
TENURE
4.7 yrs

Joel Lawson

TITLE
Director
COMPENSATION
$246K
AGE
69
TENURE
33 yrs

Robert Strouse

TITLE
Lead Independent Director
COMPENSATION
$246K
AGE
68

Ed Antoian

TITLE
Director
COMPENSATION
$246K
AGE
61
TENURE
6.7 yrs

Harry Cherken

TITLE
Director
COMPENSATION
$246K
AGE
67
TENURE
29 yrs

Liz Lambert

TITLE
Independent Director
COMPENSATION
$246K
AGE
53
TENURE
3.1 yrs

Scott Galloway

TITLE
Director
COMPENSATION
$246K
AGE
52
TENURE
2 yrs

Sukhinder Cassidy

TITLE
Independent Director
AGE
47
TENURE
0.4 yrs
Recent Insider Trading
  • No 3 month insider trading information.
Who owns this company?
X
Management checks
We assess Urban Outfitters's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. Urban Outfitters has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

External News
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Simply Wall St News

Urban Outfitters Inc (URBN): Will The Growth Last?

See our latest analysis for URBN Exciting times ahead for URBN Analyst expectation from the stock's 23 analysts is one of positive sentiment, with earnings estimated to expand from current levels of $1.5 to $1.575 over the next couple of years. … This illustrates a relatively optimistic outlook in the near term, with a relatively solid earnings per share growth rate of 5.03% over the next few years. … The company delivered a growth rate of 19.92% over the past couple of years, which is indicative of a sustained level of growth – no surprises there for shareholders.

Simply Wall St -

What Is Urban Outfitters Inc's (URBN) Share Price Doing?

It’s trading around 15% below my intrinsic value, which means if you buy URBN today, you’d be paying a fair price for it. … If you’ve been keeping tabs on URBN for a while, now may not be the most optimal time to buy, given it is trading around its fair value. … The price seems to be trading at fair value, which means there’s less benefit from mispricing.

Simply Wall St -

Company Info

Map
Description

Urban Outfitters, Inc. engages in the retail and wholesale of general consumer products. It operates through two segments, Retail and Wholesale. The company retails women’s and men’s fashion apparel, intimates, footwear, beauty and accessories, home goods, activewear, and electronics for young adults aged 18 to 28 under the Urban Outfitters brand; and assortment, including women’s casual apparel and accessories, intimates, shoes, beauty, home furnishings, and various gifts and decorative items for women aged 28 to 45 under the Anthropologie brand. It also offers a collection of heirloom quality wedding gowns, bridesmaid frocks, party dresses, assorted jewelry, headpieces, footwear, lingerie, and decorations under the Bhldn brand; and lifestyle home and garden products, antiques, live plants, flowers, wellness products, and accessories under the Terrain brand, as well as operates food and beverage restaurant services. In addition, the company operates Free People retail stores that provide merchandise mix of casual women’s apparel, intimates, shoes, accessories, activewear, beauty and wellness products, home products, and gifts for women aged 25 to 30. It serves its customers directly through retail stores, Websites, mobile applications, catalogs, and customer contact centers. As of November 20, 2017, the company operated 245 Urban Outfitters stores in the United States, Canada, and Europe; 227 Anthropologie Group stores comprising Anthropologie, Bhldn, and Terrain brands in the United States, Canada, and Europe, as well as 132 Free People stores in the United States and Canada; and 12 food and beverage restaurants. It also engages in the wholesale business under the Free People brand that designs, develops, and markets young women’s contemporary casual apparel and shoes to approximately 1,900 specialty stores and select department stores worldwide. The company was founded in 1970 and is based in Philadelphia, Pennsylvania.

Details
Name: Urban Outfitters, Inc.
URBN
Exchange: NasdaqGS
Founded: 1970
$3,663,128,258
108,248,471
Website: http://www.urbn.com
Address: Urban Outfitters, Inc.
5000 South Broad Street,
Philadelphia,
Pennsylvania, 19112,
United States
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NasdaqGS URBN Common Shares Nasdaq Global Select US USD 09. Nov 1993
DB UOF Common Shares Deutsche Boerse AG DE EUR 09. Nov 1993
Number of employees
Current staff
Staff numbers
17,160
Urban Outfitters employees.
Industry
Apparel Retail
Retail
Company Analysis and Financial Data Status
Area Date
Company Analysis updated: 2018/01/19
Last estimates confirmation: 2018/01/17
Last earnings update: 2017/10/31
Last annual earnings update: 2017/01/31


All dates in UTC. All financial data provided by Standard & Poor’s Capital IQ.

Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.