Urban Outfitters, the leading stock in apparel retail, broke out of a base Monday and is the IBD Stock of the Day.
The company boasts the No. 1 ranking in the apparel retail industry group, with a 96 Composite Rating, according to IBD Stock Checkup. It also has the highest EPS Rating of 30 stocks in the group.
Sales for the April-ended quarter, reported May 21, rose 10.7% to $1.33 billion. Earnings per share jumped 78.5% to $1.16. It was the third consecutive quarter of accelerating EPS growth after gains of 13%, 25% and 51%.
The retailer's gross profit increased 19.8% to $489.1 million in the latest quarter. The company said improved markdowns, lower delivery costs and other factors helped margins.
Urban's most recent earnings report defied expectations for softer consumer trends. The retailer described customers as "resilient" and eager for spring fashion.
Analysts expect current-quarter earnings to climb 18.4% to $1.47 a share, with sales up 9.3% to $1.477 billion, per FactSet. Same-store sales are seen rising 4.8%. For the full fiscal year, the consensus earnings estimate is $5.02 per share, up 23.7%, on sales of $6.026 billion, up 8.6%.
Urban Outfitters operates more than 700 stores globally under the Anthropologie, Free People, FP Movement, Urban Outfitters, Nuuly and other brands. Nearly 88% of sales are in the U.S., with the rest scattered across Europe and Canada.
Stock Breaks Out Of A Base
Urban Outfitters stock on Monday climbed above the 74.45 buy point of a cup-with-handle base. The buy range goes as high as 78.17.
Trading volume was moderately above average, while the relative strength line has not caught up with the stock's move to new highs.
The stock rallied 23% after the strong earnings report on May 21, then based for the seven weeks that followed.
Urban Outfitters stock has a 21-day average true range (ATR) of 3.27%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
