Should you sell your Ralph Lauren (NYSE:RL) and Urban Outfitters (NASDAQ:URBN) positions after an upsurge?

As many millenniums are getting more into consumer cyclical space, we are going to outline Urban Outfitters and Ralph Lauren as potential medium-term trade. We are going to inspect some of the competitive aspects of both Urban and Ralph.
Published over a year ago
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Reviewed by Rifka Kats

By analyzing existing fundamental drivers between Urban Outfitters and Ralph, you can compare the effects of market volatilities on both companies' prices and check if they can diversify away market risk if combined in one of your portfolios. You can also utilize pair trading strategies for matching a long position in Ralph with a short position in Urban Outfitters. Check out our pair correlation module for more information.

Let's begin by analyzing the assets.
The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Urban Outfitters has an asset utilization ratio of 248.19 percent. This suggests that the company is making $2.48 for each dollar of assets. An increasing asset utilization means that Urban Outfitters is more efficient with each dollar of assets it utilizes for everyday operations.
Investment perspective, in general, refers to a viewpoint or opinion regarding investment opportunity in Urban Outfitters. It encompasses the assessment of an investment's potential risks and rewards, and expectations for its performance over time. Several factors influence the investment perspective on Urban Outfitters, including investment goals, risk tolerance, time horizon, market conditions, and research and analysis. Investors have varying goals, such as capital preservation, income generation, or long-term growth. Risk tolerance plays a significant role in shaping an investor's perspective, with some being more risk-averse and others willing to take on higher risks for potential returns.

How important is Urban Outfitters's Liquidity

Urban Outfitters financial leverage refers to using borrowed capital as a funding source to finance Urban Outfitters ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Urban Outfitters financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Urban Outfitters' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Urban Outfitters' financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Urban Outfitters's total debt and its cash.

Breaking down Urban Outfitters Further

Revenue is income that a firm generates from business activities such us rendering services or selling goods to customers. It is a crucial part of a business and an essential item when evaluating a company's financial statements. Revenues from a firm's primary business operations can be reported on the income statement as sales revenue, net sales, or simply sales, depending on the industry in which a given company operates.
Revenue is typically recorded when cash or cash equivalents are exchanged for services or goods and can include product or services discounts, promotions, as well as early payments on invoices or services rendered in advance.

Revenue Breakdown

Let me now go over Urban Outfitters revenue. Based on the latest financial disclosure, Urban Outfitters reported 4.55 B of revenue. This is 36.18% lower than that of the Consumer Cyclical sector and significantly higher than that of the Apparel Retail industry. The revenue for all United States stocks is 51.77% higher than that of Urban Outfitters. As for Ralph Lauren we see revenue of 5.98 B, which is much higher than that of the Apparel Retail
Urban4.55 Billion
Sector0.0
Ralph5.98 Billion
4.5 B
Urban
Sector
B
Ralph

How will Urban institutional investors react to the next slide?

Treynor Ratio just dropped to -0.25, may entail upcoming price decrease. Urban Outfitters exhibits very low volatility with skewness of -0.55 and kurtosis of 0.69. However, we advise investors to further study Urban Outfitters technical indicators to make sure all market info is available and is reliable. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Urban Outfitters' stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Urban Outfitters' stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Urban Outfitters Implied Volatility

Urban Outfitters' implied volatility exposes the market's sentiment of Urban Outfitters stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Urban Outfitters' implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Urban Outfitters stock will not fluctuate a lot when Urban Outfitters' options are near their expiration.

Our Bottom Line On Urban Outfitters

Whereas some other firms in the apparel retail industry are either recovering or due for a correction, Urban may not be as strong as the others in terms of longer-term growth potentials. To sum up, as of the 21st of May 2022, we believe that at this point, Urban Outfitters is undervalued with below average odds of financial turmoil within the next 2 years. Our actual 'Buy-vs-Sell' recommendation on the company is Hold.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Urban Outfitters. Please refer to our Terms of Use for any information regarding our disclosure principles.

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