URBAN OUTFITTERS INC (NASDAQ:URBN) fits the criteria for long-term investors seeking growth at a reasonable price (GARP). The company operates in the retail sector with brands like Anthropologie, Free People, and Urban Outfitters, along with a subscription rental service under Nuuly. Our Peter Lynch-inspired screener identified URBN due to its balanced growth, profitability, and valuation metrics.
Why URBN Fits the GARP Approach
Sustainable Growth: URBN’s earnings per share (EPS) have grown at an average annual rate of 15.5% over the past five years, aligning with Peter Lynch’s preference for steady but not excessive growth.
Attractive Valuation: The stock’s PEG ratio (0.99) is below 1, indicating it is reasonably priced relative to its earnings growth.
Strong Profitability: With a return on equity (ROE) of 18.47%, URBN outperforms most peers in the specialty retail industry.
Healthy Financials: The company carries no debt (Debt/Equity = 0) and maintains a solid current ratio (1.40), reflecting good liquidity.
Fundamental Strengths
URBN’s fundamental analysis highlights several positives:
Profitability: High profit margins (7.91%) and improving operating margins suggest efficient operations.
Financial Health: A strong Altman-Z score (4.40) indicates low bankruptcy risk, while share buybacks signal confidence in future performance.
Valuation: Trading at a P/E of 15.37, URBN is cheaper than 77% of its industry peers and the broader S&P 500.
This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own analysis before making investment decisions.