Is Urban Outfitters (URBN) Stock Undervalued Right Now?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Urban Outfitters (URBN) is a stock many investors are watching right now. URBN is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 13.05 right now. For comparison, its industry sports an average P/E of 13.19. Over the past year, URBN's Forward P/E has been as high as 15.49 and as low as 9.10, with a median of 12.80.

Another valuation metric that we should highlight is URBN's P/B ratio of 2.48. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. URBN's current P/B looks attractive when compared to its industry's average P/B of 5.72. URBN's P/B has been as high as 2.97 and as low as 1.40, with a median of 2.14, over the past year.

Finally, investors should note that URBN has a P/CF ratio of 10.93. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. URBN's P/CF compares to its industry's average P/CF of 12.73. Over the past 52 weeks, URBN's P/CF has been as high as 12.80 and as low as 7.56, with a median of 10.42.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Urban Outfitters is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, URBN feels like a great value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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