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Key Points
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Urban Outfitters beat on both the top and bottom lines last night.
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Q1 earnings were nearly double what the retailer earned a year ago.
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Investors are cheering the blowout quarter.
Urban Outfitters (NASDAQ: URBN) stock exploded 21.4% higher through 11 a.m. ET Thursday after demolishing Q1 earnings forecasts last night.
Heading into the report, Wall Street analysts forecast Urban Outfitters would earn only $0.83 on less than $1.3 billion in Q1 sales. In fact, the retailer earned $1.16 per share on sales of more than $1.3 billion.
Urban Outfitters Q1 earnings
Sales surged nearly 11% year over year for Urban Outfitters, with "comparable retail segment net sales" (i.e., same-store sales) increasing 4.8%. SSS growth was strongest at the company's Anthropologie brand, up 6.9%, with SSS gains of 3.1% at Free People and 2.1% at Urban Outfitters per se.
CEO Richard Hayne exulted over the "record first-quarter revenues and profits," highlighting "positive sales growth and improved profitability across all brands and segments." Earnings of $1.16 -- a generally accepted accounting principles (GAAP) number, by the way -- nearly doubled in comparison to last year's Q1.
Is Urban Outfitters stock a buy?
Management didn't give guidance on what to expect in Q2, but Hayne did forecast "continued success." Wall Street seems on board with the assessment as well, forecasting 15% earnings growth this year to $4.91 per share.
Assuming Urban Outfitters hits that number, the stock would be selling for 15 times current-year earnings, right in line with a 15% growth estimate. Even with no dividend to boost the stock's attractiveness, the worst I could say about Urban Outfitters today is that the stock looks fairly priced, and largely unaffected by President Trump's tariffs war.
Call me an eternal optimist, but Urban Outfitters stock looks like a buy to me.
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