Ascena Retail Group (ASNA) vs. Urban Outfitters (URBN) Critical Analysis – TrueBlueTribune




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

Volatility and Risk


Ascena Retail Group has a beta of 1.96, suggesting that its share price is 96% more volatile than the S&P 500. Comparatively, Urban Outfitters has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500.



Profitability

This table compares Ascena Retail Group and Urban Outfitters’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ascena Retail Group -16.39% 2.50% 0.64%
Urban Outfitters 4.81% 13.34% 9.07%

Valuation and Earnings

This table compares Ascena Retail Group and Urban Outfitters’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ascena Retail Group $6.65 billion 0.06 -$1.07 billion ($5.51) -0.37
Urban Outfitters $3.55 billion 1.05 $218.12 million $1.50 22.83

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

Institutional & Insider Ownership

94.9% of Ascena Retail Group shares are owned by institutional investors. Comparatively, 86.2% of Urban Outfitters shares are owned by institutional investors. 8.0% of Ascena Retail Group shares are owned by insiders. Comparatively, 26.3% of Urban Outfitters shares are owned 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 summary of current recommendations and price targets for Ascena Retail Group and Urban Outfitters, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ascena Retail Group 1 8 0 0 1.89
Urban Outfitters 3 18 9 0 2.20

Ascena Retail Group presently has a consensus target price of $2.75, suggesting a potential upside of 34.15%. Urban Outfitters has a consensus target price of $25.81, suggesting a potential downside of 24.61%. Given Ascena Retail Group’s higher probable upside, analysts plainly believe Ascena Retail Group is more favorable than Urban Outfitters.

Summary

Urban Outfitters beats Ascena Retail Group on 10 of the 14 factors compared between the two stocks.

Ascena Retail Group Company Profile

Ascena Retail Group, Inc. is a specialty retailer of apparel for women and tween girls. The Company operates through six segments: ANN, Justice, Lane Bryant, maurices, dressbarn and Catherines. The ANN segment offers feminine classics and fashion choices, sold primarily under the Ann Taylor and LOFT brands. The Justice segment offers apparel to girls who are aged 6 to 12. The Lane Bryant segment offers apparel to female customers in plus-sizes 14-28. The maurices segment offers women’s casual clothing, career wear, dressy apparel, active wear and accessories. The dressbarn segment consists of the specialty retail, outlet and e-commerce operations of the dressbarn brand. The Catherines segment offers classic apparel and accessories to female customers for wear-to-work and casual lifestyles. As of July 30, 2016, the Company operated approximately 4,900 stores in 49 United States’ states, the District of Columbia, Canada and Puerto Rico.

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.




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