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What The Buy Side Expects From Urban Outfitters

By Estimize Stock MarketsMay 19, 2014 07:57AM ET
What The Buy Side Expects From Urban Outfitters
By Estimize   |  May 19, 2014 07:57AM ET
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Urban Outfitters Inc. (NASDAQ:URBN)) is set to report FQ1 2015 earnings after the market closes on Monday, May 19th.  Urban Outfitters owns and operates a chain of retail clothing stores. This quarter Wall Street is expecting the clothing company to post earnings 5c per share lower than FQ1 of last year and for year over revenue to grow by 6%. Urban Outfitters has posted growing earnings and revenue in each quarter over the previous 2 years but is expected to buck that trend Monday afternoon. Here’s what investors are expecting from Urban Outfitters.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.

Urban Outfitters
Urban Outfitters

The current Wall Street consensus expectation is for Urban Outfitters to report 27c EPS and $688.27M revenue while the current Estimize.com consensus from 14 Buy Side and Independent contributing analysts is 30c EPS and $697.87M in revenue. This quarter the buy-side as represented by the Estimize.com community is expecting Urban Outfitters to edge past the Wall Street consensus by a comfortable margin.

Over the previous 6 quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting Urban Outfitters’s EPS and revenue 3 and 4 times respectively. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time.

More importantly it does a better job of representing the market’s actual expectations. It has been confirmed by Deutsche Bank Quant. Research and an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. Here we are seeing a larger than usual differential between the earnings expectations from Wall Street and Estimize.

Historical EPS / Rev Consensus
Historical EPS / Rev Consensus

The distribution of estimates published by analysts on the Estimize.com platform range from 26c to 34c per share and from $672.00M to $715.00M in revenues. This quarter we’re seeing a moderate range of estimates on Urban Outfitters.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signals less agreement in the market, which could mean greater volatility post earnings.

Change in EPS / Rev Consensus
Change in EPS / Rev Consensus

Throughout the quarter the Wall Street EPS consensus fell from a high of 34c to 27c while the Estimize consensus started and ended the period at 30c. Meanwhile Wall Street reduced its revenue consensus from $713.32M to $688.27M while the Estimize consensus rose late in the period from a low of $694.34M to $697.87M.  Timeliness is correlated with accuracy and the directionality of analyst revisions going into an earnings report is often a leading indicator. Here we see diverging revenue expectations between Wall Street and the Estimize community.

EPS & Revenue
EPS & Revenue

The analyst with the highest estimate confidence rating this quarter is turbinecity who projects 28c EPS and $696.09B in revenue. turbinecity was our Winter 2014 season winner and is ranked 2nd overall among over 4,450 contributing analysts. This season turbinecity has been more accurate than Wall Street in forecasting EPS and revenue 60% and 51% of the time respectively throughout a staggering 1,063 estimates.

Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case turbinecity expects Urban Outfitters to beat Wall Street’s expectations but fail to live up to the consensus from the Estimize community.

On Monday Urban Outfitters is expected to report its first year over year decline in earnings in the past 2 years. With that being said, contributing analysts on the Estimize community are looking for the clothing retailer’s earnings to come in 3c per share higher than the Wall Street consensus and for revenue to exceed the Street’s forecast by nearly $10 million.

Get access to estimates for Urban Outfitters published by your Buy Side and Independent analyst peers and follow the rest of earnings season by heading over to Estimize.com. Register for free to create your own estimates and see how you stack up to Wall Street.

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What The Buy Side Expects From Urban Outfitters

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What The Buy Side Expects From Urban Outfitters

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