Is Urban Outfitters, Inc. (URBN) Soaring Insider Trading Sending a Signal?

The exact reason why investors have been taking down Urban Outfitters, Inc. (NASDAQ:URBN) stock at a frenetic pace might seem like a bit of a head-scratcher at the moment, but that’s only if you are buying the stock for the wrong reasons. On 14 March, the shares dropped -0.49 points or -1.67 percent at $28.86 with a light trade volume of 2.016 million shares. After opening the session at $29.18, the shares went as high as $29.29 and as low as $28.59, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $3.16 billion and now has 109.42 million shares outstanding. Urban Outfitters, Inc. (URBN) stock has lost -7.97 percent of market value in 21 trading days.

URBN stock has a trailing 3-year beta of 0.55, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $2.73 a share in the trailing twelve months. The stock’s value has fallen -13.07 percent year to date (YTD) against a decline of -18.61 percent in 12 month’s time. The company’s shares still trade -45.03 percent away from its 1-year high of $52.50 and 0.16 percent up from 52-week low of $28.82. The average consensus rating on the company is 2.6, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Urban Outfitters, Inc. (URBN) will probably climb 24.08 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $50-month high price target. This represents a whopping 73.25 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $33, which represents a return potential of 14.35 percent when compared to the closing price of the stock of $28.86 on Thursday, March 14. The lowest price target for the stock is $29 — slightly more than 0.49 percent from URBN’s current share price.

History has shown that shares in Urban Outfitters, Inc. have gone up on 18 different earnings reaction days and are predicted to add 0.06 percent when the company reports upcoming earnings. Investors will get their next glimpse of URBN’s Q1 earnings on May 21. Analysts are forecasting revenue to suffer decline of -0.1 percent to $855M in the fiscal first quarter, while earnings are seen soaring by nearly -34.21 percent to $0.25 per share. It earned $0.8 per share, better than the $0.79, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $1.13B, worse than the $1.14B analysts expected. Earnings are estimated to increase by -17.2 percent this year, 8.13 percent next year and continue to increase by 10.73 percent annually for the next 5 years.

The stock is currently hovering around the first support level of $28.54. Below this, the next support is placed in the zone of $28.21. Till the time, the URBN stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 34.01 on daily chart, which may remain a cause for comfort. If the price breaks below $28.21 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $29.24 mark may result into a pull-back move towards $29.61 level.

Shares of Urban Outfitters, Inc. (URBN) are trading at a P/E ratio of 15.47 times earnings reported for the past 12 months. The industry URBN operates in has an average P/E of 34.83. Its P/E ratio went as low as 12.84X and as high as 26.45 over the 5-year span.Further, it is sporting a 0.8 on the Price-to-Sales ratio. Compare this with the industry average P/S of 2.33. 34.1 percent is the gross profit margin for Urban Outfitters, Inc. and operating margin sits at 8.5 percent. Along with this, the net profit margin is 4.6 percent.