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Will Urban Outfitters (URBN) Miss Earnings Estimates? - Analyst Blog

Posted: 5/16/2014 10:50:00 AM
Referenced Stocks: FL;KR;LGF;URBN

Urban Outfitters Inc. ( URBN ), the retailer of apparel, footwear and accessories, is set to report its first-quarter fiscal 2015 results on May 19, 2014. Last quarter, it posted a positive surprise of 7.3%. Let us see how things are developing for this announcement.

Growth Factors this Quarter

Urban Outfitters' focus on increasing customer count, store expansion, online and mobile marketing endeavors, and direct-to-consumer business will act as catalysts. However, adverse weather conditions and weak product execution might impact the company's outcome.

Earnings Whispers

Our proven model does not conclusively project Urban Outfitters as likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below.

Negative Zacks ESP: ESP for Urban Outfitters is -3.70%.This is because the Most Accurate estimate is pegged at 26 cents, while the Zacks Consensus Estimate stands at 27 cents.

Zacks Rank #3 (Hold) : Urban Outfitters' Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into an earnings announcement, especially when the company is witnessing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows these to have the right combination of elements to post an earnings beat:  

Lions Gate Entertainment Corp. ( LGF ), Earnings ESP of +7.50% and a Zacks Rank #1 (Strong Buy).

The Kroger Co. ( KR ), Earnings ESP of +0.95% and a Zacks Rank #2 (Buy).

Foot Locker, Inc. ( FL ), Earnings ESP of +1.91% and a Zacks Rank #2 (Buy).

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