Critical Survey: Urban Outfitters (NASDAQ:URBN) & Tapestry (NYSE:TPR)

Tapestry (NYSE:TPR) and Urban Outfitters (NASDAQ:URBN) are both retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, analyst recommendations and dividends.

Insider and Institutional Ownership

90.8% of Tapestry shares are owned by institutional investors. Comparatively, 77.6% of Urban Outfitters shares are owned by institutional investors. 1.3% of Tapestry shares are owned by company insiders. Comparatively, 31.6% of Urban Outfitters shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for Tapestry and Urban Outfitters, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tapestry	0	5	14	1	2.80
Urban Outfitters	1	8	8	0	2.41

Tapestry currently has a consensus target price of $129.11, suggesting a potential downside of 0.66%. Urban Outfitters has a consensus target price of $86.67, suggesting a potential upside of 28.60%. Given Urban Outfitters’ higher probable upside, analysts clearly believe Urban Outfitters is more favorable than Tapestry.

Volatility and Risk

Tapestry has a beta of 1.63, meaning that its share price is 63% more volatile than the S&P 500. Comparatively, Urban Outfitters has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500.

Earnings and Valuation

This table compares Tapestry and Urban Outfitters”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tapestry	$7.21 billion	3.69	$183.20 million	$1.12	116.04
Urban Outfitters	$5.55 billion	1.09	$402.46 million	$5.30	12.72

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

Profitability

This table compares Tapestry and Urban Outfitters’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tapestry	3.77%	116.42%	17.30%
Urban Outfitters	8.15%	18.33%	10.04%

Summary

Tapestry beats Urban Outfitters on 10 of the 15 factors compared between the two stocks.

About Tapestry

Tapestry, Inc. provides luxury accessories and branded lifestyle products in the United States, Japan, Greater China, and internationally. The company operates in three segments: Coach, Kate Spade, and Stuart Weitzman. It offers women’s handbags; and women’s accessories, such as small leather goods which includes mini and micro handbags, money pieces, wristlets, pouches, and cosmetic cases, as well as novelty accessories including address books, time management and travel accessories, sketchbooks, and portfolios; and belts, key rings, and charms. The company also provides men products, which includes bag collections, such as business cases, computer bags, messenger-style bags, backpacks, and totes; small leather goods including wallets, card cases, travel organizers, and belts; and footwear, watches, fragrances, sunglasses, novelty accessories, and ready-to-wear items. In addition, it offers other products including women’s footwear and fragrances; eyewear and sunglasses; and jewelry, such as bracelets, necklaces, rings, and earrings, watches, and other women’s seasonal lifestyle apparel collections, including outerwear, ready-to-wear and cold weather accessories, such as gloves, scarves, and hats. Further, the company provides kids items, housewares, and home accessories, such as fashion bedding and tableware, stationery, and gifts. It offers its products through e-commerce sites and concession shop-in-shops, wholesale, and third-party distributors under the Coach, Kate Spade, and Stuart Weitzman brand names. The company was formerly known as Coach, Inc. and changed its name to Tapestry, Inc. in October 2017. Tapestry, Inc. was founded in 1941 and is headquartered in New York, New York.

About Urban Outfitters

Urban Outfitters, Inc. engages in the retail and wholesale of general consumer products. The company operates through three segments: Retail, Wholesale, and Nuuly. It operates Urban Outfitters stores, which offer women's and men's fashion apparel, activewear, intimates, footwear, accessories, home goods, electronics, and beauty products for young adults aged 18 to 28; and Anthropologie stores that provide women's apparel, accessories, intimates, shoes, and home furnishings, as well as gifts, decorative items, and beauty and wellness products for women aged 28 to 45. The company also operates Terrain stores that provide lifestyle home products, garden and outdoor living products, antiques, live plants, flowers, wellness products, and accessories. In addition, it operates Free People retail stores, which offer casual women's apparel, intimates, activewear, shoes, accessories, home products, gifts, and beauty and wellness products for young women aged 25 to 30; and restaurants, as well as women's apparel subscription rental service under the Nuuly brand. Further, the company is involved in the wholesale of young women's contemporary casual apparel, intimates, activewear, and shoes under the Free People brand; and apparel collections under the Urban Outfitters brand. The company serves its customers directly through retail stores, websites, mobile applications, catalogs and customer contact centers, franchisee-owned stores, and department and specialty stores, as well as social media and third-party digital platforms. Urban Outfitters, Inc. was founded in 1970 and is based in Philadelphia, Pennsylvania.