Contrasting Urban Outfitters (URBN) and Guess? (GES)

Urban Outfitters (NASDAQ: URBN) and Guess? (NYSE:GES) are both cyclical consumer goods & services companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, profitability, institutional ownership, dividends, valuation and risk.

Profitability

This table compares Urban Outfitters and Guess?’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Urban Outfitters 4.81% 13.26% 9.11%
Guess? 0.43% 4.14% 2.62%

Risk & Volatility

Urban Outfitters has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500. Comparatively, Guess? has a beta of 0.41, suggesting that its stock price is 59% less volatile than the S&P 500.

Institutional & Insider Ownership

87.4% of Urban Outfitters shares are held by institutional investors. Comparatively, 77.9% of Guess? shares are held by institutional investors. 26.3% of Urban Outfitters shares are held by insiders. Comparatively, 29.6% of Guess? shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings for Urban Outfitters and Guess?, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Urban Outfitters 3 18 9 0 2.20
Guess? 1 4 4 0 2.33

Urban Outfitters presently has a consensus price target of $23.78, suggesting a potential downside of 20.21%. Guess? has a consensus price target of $14.11, suggesting a potential downside of 9.64%. Given Guess?’s stronger consensus rating and higher possible upside, analysts plainly believe Guess? is more favorable than Urban Outfitters.

Valuation and Earnings

This table compares Urban Outfitters and Guess?’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Urban Outfitters $3.55 billion 0.94 $218.12 million $1.50 19.87
Guess? $2.21 billion 0.59 $22.76 million $0.11 142.00

Urban Outfitters has higher revenue and earnings than Guess?. Urban Outfitters is trading at a lower price-to-earnings ratio than Guess?, indicating that it is currently the more affordable of the two stocks.

Dividends

Guess? pays an annual dividend of $0.90 per share and has a dividend yield of 5.8%. Urban Outfitters does not pay a dividend. Guess? pays out 818.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Guess? has raised its dividend for 3 consecutive years.

Summary

Urban Outfitters beats Guess? on 11 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.

Guess? Company Profile

Guess?, Inc. designs, markets, distributes and licenses a lifestyle collections of apparel and accessories for men, women and children. The Company operates through five segments: Americas Retail, Europe, Asia, Americas Wholesale and Licensing. The Americas Retail segment includes the Company’s retail and e-commerce operations in North and Central America and its retail operations in South America. The Europe segment includes the Company’s retail, e-commerce and wholesale operations in Europe and the Middle East. The Asia segment includes the Company’s retail, e-commerce and wholesale operations in Asia. The Asia segment includes the Company’s retail, e-commerce and wholesale operations in Asia. The Licensing segment includes the around the world licensing operations of the Company. Its apparel is marketed under various names, including GUESS, GUESS?, GUESS U.S.A., GUESS Jeans, MARCIANO, Question Mark and Triangle Design, GUESS Kids, Baby GUESS, YES, G by GUESS and GUESS by MARCIANO.

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