Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Urban Outfitters, Inc. (NASDAQ:URBN) due to its excellent fundamentals in more than one area. URBN is a company that has been able to sustain great financial health, trading at an attractive share price. In the following section, I expand a bit more on these key aspects. For those interested in digging a bit deeper into my commentary, take a look at the report on Urban Outfitters here.
Excellent balance sheet and good value
URBN's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This implies that URBN manages its cash and cost levels well, which is a key determinant of the company’s health. Looking at URBN's capital structure, the company has no debt on its balance sheet. It has only utilized funding from its equity capital to run the business, which is rather impressive for a US$2.8b market cap company. URBN has plenty of financial flexibility, without debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future. URBN's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts' consensus forecast growth be correct. Compared to the rest of the retail industry, URBN is also trading below its peers, relative to earnings generated. This supports the theory that URBN is potentially underpriced.
For Urban Outfitters, I've compiled three key factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for URBN’s future growth? Take a look at our free research report of analyst consensus for URBN’s outlook.
- Historical Performance: What has URBN's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of URBN? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.