Head to Head Analysis: GAP (NYSE:GAP) & Urban Outfitters (NASDAQ:URBN)

Urban Outfitters (NASDAQ:URBN) and GAP (NYSE:GAP) are both mid-cap retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, analyst recommendations, institutional ownership, earnings and profitability.

Insider & Institutional Ownership

77.6% of Urban Outfitters shares are held by institutional investors. Comparatively, 58.8% of GAP shares are held by institutional investors. 31.8% of Urban Outfitters shares are held by insiders. Comparatively, 31.0% of GAP shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

Urban Outfitters has a beta of 1.49, meaning that its share price is 49% more volatile than the S&P 500. Comparatively, GAP has a beta of 2.35, meaning that its share price is 135% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Urban Outfitters	5.83%	15.49%	7.96%
GAP	5.05%	28.89%	6.92%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Urban Outfitters and GAP, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Urban Outfitters	1	7	2	0	2.10
GAP	0	3	0	0	2.00

Urban Outfitters presently has a consensus price target of $42.30, indicating a potential upside of 12.71%. GAP has a consensus price target of $27.00, indicating a potential upside of 21.79%. Given GAP’s higher probable upside, analysts clearly believe GAP is more favorable than Urban Outfitters.

Earnings & Valuation

This table compares Urban Outfitters and GAP”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Urban Outfitters	$5.15 billion	0.67	$287.67 million	$3.27	11.48
GAP	$15.17 billion	0.55	$502.00 million	($27.20)	-0.82

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

Summary

Urban Outfitters beats GAP on 9 of the 14 factors compared between the two stocks.

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.

About GAP

The Gap, Inc. operates as an apparel retail company. The company offers apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, and Athleta brands. Its products include adult apparel and accessories; and fitness and lifestyle products for use in yoga, training, sports, travel, and everyday activities for women and girls. The company offers its products through company-operated stores, franchise stores, websites, and third-party arrangements. It has franchise agreements to operate Old Navy, Gap, Banana Republic, and Athleta stores and websites in Asia, Europe, Latin America, the Middle East, and Africa. The Gap, Inc. was incorporated in 1969 and is headquartered in San Francisco, California.