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Should Value Investors Buy Urban Outfitters (URBN) Stock?


While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the “Value” category. When paired with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is Urban Outfitters (URBN). URBN is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 11.57 right now. For comparison, its industry sports an average P/E of 12.63. Over the past 52 weeks, URBN’s Forward P/E has been as high as 21.58 and as low as 10.92, with a median of 16.80.

Investors will also notice that URBN has a PEG ratio of 1.03. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. URBN’s PEG compares to its industry’s average PEG of 1.12. URBN’s PEG has been as high as 1.80 and as low as 0.98, with a median of 1.40, all within the past year.

We should also highlight that URBN has a P/B ratio of 2.52. Investors use the P/B ratio to look at a stock’s market value versus its book value, which is defined as total assets minus total liabilities. This company’s current P/B looks solid when compared to its industry’s average P/B of 3.92. Within the past 52 weeks, URBN’s P/B has been as high as 3.86 and as low as 2.37, with a median of 3.08.

Value investors will likely look at more than just these metrics, but the above data helps show that Urban Outfitters is likely undervalued currently. And when considering the strength of its earnings outlook, URBN sticks out at as one of the market’s strongest value stocks.

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