Is Urban Outfitters (URBN) Poised to Beat Q4 Earnings?


The shifting retail landscape has been written about ad nauseam, and for good reason. Brick-and-mortar businesses continue to struggle and e-commerce continues to infiltrate more and more retail sectors.

Nevertheless, investors understand that negative industry trends don’t adversely impact all companies at all times. Change can also force firms to adapt and improve. For instance, retail bellwether Macy’s M recently topped fourth-quarter earnings estimates and provided strong 2018 guidance after early 2017 struggles (also read: Macy's Soars on Earnings Beat & Strong Guidance).

Similarly, trendy youthful retailer Urban Outfitters URBN hit a rough patch in the fourth quarter of 2016 that carried into the first quarter of 2017. Urban then turned things around over the last two quarters, posting earnings beats of 24% and 19%, respectively. Now, investors will want to know if Urban Outfitters can continue this streak.

Investors will be happy to note that the retailer is projected to see its Q4 sales reach $1.09 billion, which would mark 5.7% year-over-year growth. Urban Outfitters’ earnings are expected to surge 14.6% to reach $0.63 per share.

But investors still need to know if URBN is projected to top this EPS estimate.

Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to beat. Zacks Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst estimates.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Urban Outfitters’ current Earnings ESP of 0.85% means earnings estimates have been higher directly ahead of the retailer’s Q4 results. Coupled with its current standing as a Zacks Rank #3 (Hold), investors should consider the stock as one that seems likely to beat earnings estimates.

Urban Outfitter is set to report its Q4 and fiscal 2017 earnings results after market close on Tuesday, March 6.

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