Urban Outfitters, Inc. (URBN), Abercrombie & Fitch Co. (ANF), Aeropostale, Inc. (ARO): This Best of Breed Stock Looks Set to Scale Greater Heights

A justified premium
Considering Urban Outfitters’ recent performances and robust growth plans, it isn’t surprising to see that the company commands a premium over its peers. A trailing earnings multiple of 23.5 is no doubt expensive when stacked against Abercrombie & Fitch Co. (NYSE:ANF)’s trailing P/E of 12 while Aeropostale, Inc. (NYSE:ARO) isn’t profitable on a trailing twelve month basis. A comparison of stock price performances so far this year shows that Urban Outfitters is the best of the lot.

URBN data by YCharts

Buying Urban Outfitters is probably the best option here as there’s not much sense in buying companies that have been beaten-down badly and whose recent results are a red flag. Abercrombie & Fitch Co. (NYSE:ANF) had crashed 18% after the company’s earnings and revenue dropped in the previous quarter. The decline in same-store sales stood at an ugly 10%.

Abercrombie & Fitch Co. (NYSE:ANF) management expects same-store sales to decline further in the ongoing quarter. This doesn’t make for a good reading since the company has seen comps decline for six quarters on the trot.

On the other hand, Aeropostale, Inc. (NYSE:ARO) has been the worst performer of the lot this year. The company’s same-store sales had declined a staggering 15% in the previous quarter.

Aeropostale, Inc. (NYSE:ARO) struggled due to what it called a “challenging teen retail environment with weak traffic trends and high levels of promotional activity.” In simple words, the company is struggling to attract teens to its stores as its merchandise has failed to click.

The bottom line

Given the challenging situation faced by peers, Urban Outfitters’ performance is undeniably terrific. That’s the reason why the company’s shares command a premium. Considering the growth strategies that Urban Outfitters has in place, its string of impressive performances would most likely continue.

The article This Best of Breed Stock Looks Set to Scale Greater Heights originally appeared on Fool.com and is written by Harsh Chauhan.

Harsh Chauhan has no position in any stocks mentioned. The Motley Fool recommends Urban Outfitters.

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