Is Now An Opportune Moment To Examine Urban Outfitters, Inc. (NASDAQ:URBN)?

By
Simply Wall St
Published
December 16, 2021
NasdaqGS:URBN
Source: Shutterstock

Urban Outfitters, Inc. (NASDAQ:URBN), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$37.65 at one point, and dropping to the lows of US$28.64. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Urban Outfitters' current trading price of US$29.12 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Urban Outfitters’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Urban Outfitters

Is Urban Outfitters still cheap?

Good news, investors! Urban Outfitters is still a bargain right now. According to my valuation, the intrinsic value for the stock is $37.63, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Urban Outfitters’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Urban Outfitters generate?

earnings-and-revenue-growth
NasdaqGS:URBN Earnings and Revenue Growth December 16th 2021

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -6.0% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Urban Outfitters. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although URBN is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to URBN, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on URBN for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To that end, you should learn about the 3 warning signs we've spotted with Urban Outfitters (including 2 which can't be ignored).

If you are no longer interested in Urban Outfitters, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.