Can Urban Outfitters Keep Its Rally Alive?

To evaluate this, 24/7 Wall St. has looked at its gains, its chart, its valuation, its financial performance, and what the analysts who cover Urban Outfitters are saying.

At current prices, Urban Outfitters is nearing an all-time high, on its 52-week trading range of $27.89 to $47.25. Over the past few years, the main question for this stock has been where it is going.

For a very brief period in 2013, the stock hit an all-time high, then subsequently began pushing lower and lower highs. In August of 2014, it looked like shares had turned around, but during the market sell-off in October everything came crashing back down to a multiyear low. Since that crater, Urban Outfitters’ shares have made a resounding recovery and now sit on multiyear highs.

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During the downturn from 2013 onward, many investors felt that Urban Outfitters looked like dead money. For one, the stock was not growing. Secondly the company refused to pay a dividend on its shares.

In terms of its recent 20 million common share repurchase plan, Urban Outfitters could easily keep the buyback plan alive opportunistically on pullbacks and offer a $0.38 dividend for a 1% introductory yield without even paying 20% of its normalized expected income from operations. But the company has yet to make a move in this direction.

One reason the company seems to have come alive in 2015 is that when it reported its most recent fourth-quarter financials, Urban Outfitters eclipsed the $1 billion mark for revenue. This is the first time in the history of the company that this has happened.

24/7 Wall St. recently noted that Urban Outfitters was one of the top performing stocks in the S&P 500 for 2015.

The company has a price-to-earnings (P/E) ratio of 22 times fiscal 2016 earnings, and Thomson Reuters has a consensus estimate of $2.05 in earnings per share for the 2016 fiscal year.

Urban Outfitters has a total market cap at $6 billion. According to recent screen we ran, the company has a 12% return on assets and a 16.6% return on equity.

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24/7 Wall St. has collected a few recent analyst calls from the month of March:

• Nomura maintained a Neutral rating for Urban Outfitters but raised its price target to $40 from $35.
• Jefferies had a Hold rating and raised its price target to $38 from $35.
• Barclays maintained an Equal Weight rating but raised its price target to $40 from $33.

Shares of Urban Outfitters were up 0.7% at $45.78 Monday afternoon, with the stock currently trading above its consensus analyst price target of $43.14.