Urban Outfitters, Inc. (NASDAQ:URBN): Are Analysts Right About The Drop In Earnings?
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Urban Outfitters, Inc.'s (NASDAQ:URBN) announced its latest earnings update in January 2019, which signalled that the company gained from a major tailwind, more than doubling its earnings from the prior year. Investors may find it useful to understand how market analysts predict Urban Outfitters's earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Check out our latest analysis for Urban Outfitters
Market analysts' consensus outlook for the upcoming year seems pessimistic, with earnings decreasing by -6.4%. But in the following year, there's contrast in performance, with earnings growth rates generating double digit 0.3% compared to today’s level before decreasing. to US$289m in 2022.
Although it’s informative knowing the growth rate year by year relative to today’s level, it may be more valuable determining the rate at which the company is growing every year, on average. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Urban Outfitters's earnings trajectory over time, fluctuate up and down. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -0.5%. This means, we can anticipate Urban Outfitters will chip away at a rate of -0.5% every year for the next few years.
Next Steps:
For Urban Outfitters, there are three relevant aspects you should further research:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is URBN worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether URBN is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of URBN? Explore our interactive list of stocks with large growth 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 editorial-team@simplywallst.com. 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.
