Urban Outfitters earnings preview: fashion to take center stage

Urban Outfitters (URBN) is expected to post second-quarter results on Tuesday after the bell. Analysts are expecting earnings to more than double driven by higher digital channel growth and positive retail store sales. Online spending is predicted to remain as a wildcard for the company, while investors focus on the fashion trends lineup.

On average, analysts expect the company to report earnings of $0.77 per share for the second quarter compared to a reported income of $0.44 per share a year ago. Revenue is predicted to grow by 12.20% to $979.22 million. On the market front, the majority of the analysts are recommending a “hold” rating on the stock with an average price target of $47.56.

For the latter half of 2018, the company is considered as one of the top apparel and footwear picks by the brokerage firm Jefferies, according to the Barron’s Next. The company’s fundamentals are running on the strength of the fashion cycle and a very healthy consumer setting. The firm believes more online spending is likely to remain as a contributor to the company’s results.

For the recently completed first-quarter, earnings jumped 245% helped by strong sales, improved margins, better leverage of selling, general and administrative expenses and lower taxes. Revenue increased 12.4% on double-digit growth in comp store and digital channel sales.

As of April 30, 2018, the Philadelphia, Pennsylvania-based company operated 246 Urban Outfitters stores, 226 Anthropologie Group stores, 134 Free People stores and 10 Food and Beverage restaurants. Urban Outfitters has been selling lifestyle-oriented general merchandise and consumer products through retail and wholesale.

Related: Urban Outfitters stock slides despite earnings and revenue beat

The company has exceeded the Street’s expectations thrice in the past four quarters with the earnings climbing by double digits percentage. Moving ahead, market analysts predict earnings to grow by 41% for the third quarter and by 59% for the full year 2018.

Shares of Urban Outfitters ended Monday’s regular trading session up 1.91% at $47.51 on the Nasdaq. The stock had gained 36% for the year-to-date and 147% for the past year.