Urban Outfitters (NASDAQ: URBN) and Ross Stores (NASDAQ:ROST) are both cyclical consumer goods & services companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, earnings, profitability and institutional ownership.
Institutional & Insider Ownership
84.5% of Urban Outfitters shares are owned by institutional investors. Comparatively, 91.5% of Ross Stores shares are owned by institutional investors. 26.3% of Urban Outfitters shares are owned by company insiders. Comparatively, 2.3% of Ross Stores shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
This table compares Urban Outfitters and Ross Stores’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current ratings for Urban Outfitters and Ross Stores, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Urban Outfitters currently has a consensus price target of $26.33, suggesting a potential downside of 22.41%. Ross Stores has a consensus price target of $75.89, suggesting a potential downside of 2.69%. Given Ross Stores’ stronger consensus rating and higher possible upside, analysts plainly believe Ross Stores is more favorable than Urban Outfitters.
Valuation and Earnings
This table compares Urban Outfitters and Ross Stores’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Urban Outfitters||$3.55 billion||1.04||$218.12 million||$1.50||22.63|
|Ross Stores||$12.87 billion||2.32||$1.12 billion||$3.13||24.92|
Ross Stores has higher revenue and earnings than Urban Outfitters. Urban Outfitters is trading at a lower price-to-earnings ratio than Ross Stores, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Urban Outfitters has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500. Comparatively, Ross Stores has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500.
Ross Stores pays an annual dividend of $0.64 per share and has a dividend yield of 0.8%. Urban Outfitters does not pay a dividend. Ross Stores pays out 20.4% of its earnings in the form of a dividend. Ross Stores has raised its dividend for 11 consecutive years.
Ross Stores beats Urban Outfitters on 15 of the 17 factors compared between the two stocks.
Urban Outfitters Company Profile
Urban Outfitters, Inc. is a lifestyle specialty retail company. The Company operates through two segments: Retail and Wholesale. The Company’s Retail segment consists of its Urban Outfitters, Anthropologie, Free People, Terrain and Bhldn brands, whose merchandise is sold to its customers through retail stores, Websites, mobile applications, catalogs and customer contact centers. The Retail segment also includes Vetri Family, which operates restaurants under the names Amis, Alla Spina, Lo Spiedo, Pizzeria Vetri and Osteria. Its Wholesale segment consists of the Free People wholesale division that primarily designs, develops and markets young women’s contemporary casual apparel and shoes through individual and chain specialty stores and department stores. The Company’s Wholesale segment includes Free People-branded tops, bottoms, sweaters, dresses, intimates, shoes and activewear, which are sold through department and specialty stores around the world, and its Free People stores.
Ross Stores Company Profile
Ross Stores, Inc. and its subsidiaries operate two brands of off-price retail apparel and home fashion stores-Ross Dress for Less (Ross) and dd’s DISCOUNTS. The Company is the off-price apparel and home fashion chain in the United States, with 1,340 locations in 36 states, the District of Columbia and Guam, as of January 28, 2017. The Company offers in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day. The Company also operated 193 dd’s DISCOUNTS stores in 15 states as of January 28, 2017. As of January 28, 2017, the Company operated a total of 1,533 stores consisted of 1,340 Ross stores and 193 dd’s DISCOUNTS stores. As of January 28, 2017, the Company owned and operated six distribution processing facilities-three in California, one in Pennsylvania, and two in South Carolina.
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