Urban Outfitters (URBN) Q3 Earnings: What's In The Cards?

Urban Outfitters Inc. (NASDAQ:URBN) is scheduled to release third-quarter fiscal 2017 results on Nov 22. In the preceding quarter, this Philadelphia, PA-based company reported earnings beat of 17.9%.

Notably, the company surpassed the Zacks Consensus Estimate in two of the last four quarters, with an average earnings beat of 6.7%. Let’s see how things are shaping up prior to this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Urban Outfitters is likely to beat earnings estimates this quarter. This 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. Urban Outfitters has an Earnings ESP of -2.27% as the Most Accurate estimate stands at 43 cents, while the Zacks Consensus Estimate is pegged higher at 44 cents. So, although Urban Outfitters carries a Zacks Rank #3, a negative ESP makes an earnings beat unlikely. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors Influencing this Quarter

Urban Outfitters’ exposure to the Canadian and European markets could hurt its bottom-line performance in the quarter to be reported due to foreign currency headwinds. Moreover, the company faces stiff competition in the retail segment from other department stores, discounters, home furnishing stores, specialty retailers and direct-to-consumer businesses on attributes such as merchandise assortment, price, quality, location and credit facility. Aggressive pricing by competitors is likely to dent the company’s top- and bottom-line results as well as strain margins.

Nevertheless, Urban Outfitters remains committed toward improving comps, investing in direct-to-consumer business, enhancing productivity in existing channels as well as adding new brands and optimizing the inventory level. The company intends to increase wholesale operations and augment eCommerce activities.

Stocks Poised to Beat Earnings Estimates

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

Burlington Stores, Inc. (NYSE:BURL) has an Earnings ESP of + 6.06% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here

PVH Corp. (NYSE:PVH) also carries a Zacks Rank #2 and has an Earnings ESP of + 0.42%.

Express Inc. (NYSE:EXPR) has an Earnings ESP of + 16.67% and holds a Zacks Rank #3.

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