TO: Richard Hayne, Chief Executive Officer of Urban Outfitters

FROM:

Ciara Baytop, Junior Analyst

DATE: May 5, 2016

SUBJECT: Financial Analysis of Urban Outfitters vs. American Eagle
Outfitters
A financial analysis was conducted to compare Urban Outfitters (URBN)
to American Eagle Outfitters (AEO). The companies were compared
based on their net income, stock price, earnings per share, revenue,
and P/E ratio. Because URBN has a substantially higher net income,
stock price, and earnings per share, URBN is more financially stable
than AEO.
American Eagle Outfitters was chosen as Urban Outfitters comparator
company because of its common target of marketing to both genders.
URBN and AEO also make it an effort to promote their similar fashion
styles to college-aged customers. Between the two companies, Urban
Outfitters is leading in the apparel industry.
URBN Profits Twice More than AEO
Urban Outfitters net income has insurmountably surpassed American
Eagles. Over the past three years, Urban Outfitters has accumulated
$752.1 million in net income, while American Eagle has only reached
$435.87 million (Market Watch, 2016). URBN has been able to keep
more of its revenue than AEO. Figure 1 displays URBNs net income
compared to AEOs over the past three years. Urban Outfitters lead in
net income is only one way it outperforms American Eagle.

Net Income for URBN vs. AEO

300

264.1
250 237.31

282.36
232.43

224.49
213.29

200

Net Income (in millions) 150

88.79

82.98

100
50
0
URBN

Column1

Figure 1. Net Income for URBN vs. AEO.

(Market Watch, 2016)
Stock Price for URBN Doubles That of AEOs
Stock for Urban Outfitters has historically always nearly doubled
American Eagles. Currently, Urban Outfitters stock price is $30.72,
while American Eagles stock price is only $15.33 (Market Watch,
2016). Figure 2 shows URBNs constant success in stock compared to
AEO. Stock price is not the last advantage URBN has over AEO.

Stock Price for URBN vs. AEO

45
40
39.5
35

42.39
35.4
30.72

30
25

Stock Price

20
16.87
15
10

16.4

15.33

2015

2016 (Currently)

10.26

5
0
2013

2014

Fiscal Year
URBN

Column1

Figure 2. Stock Price for URBN vs. AEO.

(Market Watch, 2016)
URBNs EPS Shows Dramatic Expected Profitability Compared
to AEO
Again, Urban Outfitters continues to dominate American Eagle. Urban
Outfitters current EPS is 1.78. AEO is lagging with an EPS of 1.01
(Market Watch, 2016). URBNs significant earnings per share value
confirms that it is the better company. Table 1 shows that URBN has
higher expected profitability than AEO. Although Urban Outfitters does
outweigh American Eagle on many levels, American Eagle has been
able to outdo Urban Outfitters on minor occasions.

Table 1.
EPS for URBN vs. AEO

2013
2014
2015
2016 (Currently)

EPS for URBN vs. AEO

URBN
AEO
1.63
1.19
1.92
0.43
1.70
0.41
1.78
1.01

(Market Watch, 2016)

AEO Barely Brings in More Revenue than URBN
Urban Outfitters continuously falls closely behind American Eagle in
revenue. Over the past three years, AEO was able to bring in $10.07
million, while URBN has brought in $9.2 million (Market Watch, 2016).
Although AEO has made more in revenue, URBN was able to reach
every companys overall goal of making a greater profit from it. Figure
3 displays the very close revenues for the two companies during recent
years. American Eagle was also able to exceed URBN in one other
factor.

Revenue for URBN vs. AEO

3.48
3.09

3.32 3.28

3.31

3.45 3.52

2.79

URBN

Column1

Figure 3. Revenue for URBN vs. AEO.

(Market Watch, 2016)

AEOs Greater P/E Ratio is Unimportant

American Eagle has been successful in gaining a higher P/E ratio, but
Urban Outfitters falls closely behind. American Eagles current P/E
ratio is 15.18, while Urban Outfitters is 13.39 (Y Charts, 2016). AEO
does have a higher P/E ratio than URBN, but it is insignificant because
URBN has a greater share price and earnings per-share. This factor
alone verifies URBNs success over AEO.
Table 2. P/E Ratio for URBN vs. AEO.
(Y Charts, 2016)

2013
2014
2015
2016 (Currently)

P/E Ratio for URBN vs. AEO

URBN
AEO
32.39
21.93
19.99
17.18
20.37
89.92
13.39
15.18

References
Revenue, EPS, & Dividend - Urban Outfitters, Inc. (URBN) NASDAQ.com. (n.d.).
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http://www.nasdaq.com/symbol/urbn/revenue-eps
Urban Outfitters Inc. (n.d.). Retrieved February 07, 2016, from
http://www.marketwatch.com/investing/stock/urbn/financials
Price-Earnings Ratio (P/E Ratio) Definition | Investopedia. (2003).
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http://www.investopedia.com/terms/p/price-earningsratio.asp
American Eagle Outfitters Inc. (n.d.). Retrieved February 07, 2016, from
http://finance.yahoo.com/q?s=AEO
American Eagle Outfitters Inc. (n.d.). Retrieved February 07, 2016, from
http://www.marketwatch.com/investing/stock/aeo/financials
Folger, J. (2014). What is the formula for calculating earnings per share
(EPS)? |
Investopedia. Retrieved February 07, 2016, from

http://www.investopedia.com/ask/answers/070114/what-formulacalculating-earnings-share-eps.asp
Urban Outfitters. (n.d.). Retrieved February 07, 2016, from
https://en.wikipedia.org/wiki/Urban_Outfitters
Kane, G. (2015, November 17). Welcome to Market Realist. Retrieved
February 07,
2016, from
http://marketrealist.com/2015/11/urban-outfitters-comparepeers/
American Eagle Outfitters. (n.d.). Retrieved February 07, 2016, from
https://en.wikipedia.org/wiki/American_Eagle_Outfitters
Y Charts. (n.d.). Retrieved May 04, 2016, from
https://ycharts.com/companies/URBN/pe_ratio
Market Warch (2016). Retrieved May 04, 2016, from
http://www.marketwatch.com/investing/stock/aeo/financials