Unsafe At Current Price? – Urban Outfitters Inc. (URBN), Ollie’s Bargain Outlet Holdings Inc. (OLLI)

Urban Outfitters Inc. (NASDAQ: URBN) shares are -14.26% down in the year-to-date (YTD) period and have moved -1.00% or -$0.24 lower in the latest trading session. However, stock’s trailing 12-month performance remains nearly +93.89% lower. Comparatively, the stock is -20.05% down YTD and 37.47% over the trailing 3-month period. If we look at the shorter duration, its week performance is 26.31% and 46.52% over the month.

Analyst Recommendations

On August 26, 2020, Loop Capital recommended the URBN stock is a Hold, while earlier, Telsey Advisory Group had Upgrade the stock as a Outperform on August 26, 2020. 21 analysts offering the recommendations for the stock have a consensus rating of 2.70 to suggest that the URBN stock is a “Moderate Buy. 0 of the 21 analysts rate the stock as a “Sell”, while 0 has rated it as “Underweight”. 6 recommend buying, with 0 rating it as an Overweight.

The stock currently trades at $23.81 and analysts tracking its performance over the next 12 months have a consensus estimate price target of $24.17. The forecasts give the Urban Outfitters Inc. stock a price target range of $30.00 on the higher side while at least one analyst think the stock could plunge to a low of $19.00. The two limits represent an upside potential of 20.63% or -25.32%.

Earnings Forecast

Analysts estimate the earnings to increase 187.50% in the current quarter to $0.38, down from the $0.56 reported in the same quarter a year ago. For the current year, earnings should grow to an average of -$0.45, down -14.10% from $1.98 reported last year. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between $0.01 and $0.63. Wall Street estimates earnings per share to be at an average of $1.62 for the next year.

Insider Transactions Summary

According to SEC data, total insider shares purchases at the company stands at 9 over the last 12 months, while SEC filings reveal that there have been 11 insider sales over the same period. Insiders have purchases 113,331 shares while those sold by company executives and officers stand at 58,255. The last 3 months have seen insiders trade a total of 0 and 22,904 in purchases and sales respectively.

Hayne Azeez, a General Counsel and Secretary at the company, sold 11,501 shares worth $0.23 million at $20.00 per share on Aug 11. The General Counsel and Secretary had earlier sold another 11,403 URBN shares valued at $0.29 million on Aug 26. The shares were sold at $25.00 per share.

Ollie’s Bargain Outlet Holdings Inc. (NASDAQ:OLLI), on the other hand, is trading around $97.12 with a market cap of $7.04B and analyst research firms have a negative stance on its shares. Analysts predict that the stock will reach $112.43 and spell out a more modest performance – a 13.62% return. Some analysts are even forecasting $2.94 per share in earnings this year on a short term (1 year) basis.

Let us briefly look at the Ollie’s Bargain Outlet Holdings Inc. (OLLI) financials, with a focus on its operating details as indicated in its earnings report for the last quarter.

Company balance sheet and cash flow

OLLI’s operating margin was positive on the trailing 12 months basis, remaining steady at 10.60%, while the operating expenses over the recent quarter were at $98.38 million. This represented a 71.84% of the company’s total revenues which amounted $349.36 million. With this in place, we can see that the company’s diluted EPS inclined $0.51 on the year-over-year period, growing to $0.59 as given in the last earnings report.

In terms of the balance sheet & cash flow as of (Oct 2020), the total assets figure advanced to $1.64 billion from $1.6 billion over the previous quarter. The cash flow from operating activities totaled $41.37 million, significantly higher than the $21.98 million reported in the year-ago quarter. The company’s free cash flow for the quarter was $28.98 million.

Insider activity

Insiders have transacted a total of 46 times at Ollie’s Bargain Outlet Holdings Inc. over the last 6 months, with insider purchases undertaken 24 times and accounting for 137,733 shares. Insider sales totaled 115,045 shares over the same period, with these deals completed in 22 transactions. Looking at these numbers, we realize that net purchases over that period are 2.0 shares. Insiders now hold a total of 8.8M shares after the latest sales, with 0.40% net shares purchased.

Major holders

Insiders own 0.20% of the company shares with a share float percentage of 48.61M. Investors are also buoyed by the number of investors in a company, with Ollie’s Bargain Outlet Holdings Inc. having a total of 386 institutions that hold shares in the company. The top two institutional holders are Kayne Anderson Rudnick Investment Management LLC with over 6.21 million shares worth more than $606.47 million. As of Jun 29, 2020, Kayne Anderson Rudnick Investment Management LLC held 9.73% of shares outstanding.

The other major institutional holder is Price (T.Rowe) Associates Inc, with the investment firm holding over 6.11 million shares as of Jun 29, 2020. The firm’s total holdings are worth over $596.91 million and represent 9.58% of shares outstanding.