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Small-cap stock %UrbanOutfitters (NASDAQ: $URBN ) looks undervalued in an overheated market.

The Philadelphia-based company targets young adults with an eclectic mix of fashion, footwear, beauty products, housewares, and even vinyl records – all sold at its retail stores.

The company has been a going concern since 1970 and today has more than 700 stores around the world, including in the U.S., Canada, Ireland, India, and France.

Business remains steady, as does the company's share price. URBN stock has gained 87% over the past 12 months, including a 21% increase so far in 2025.

In the last five years, Urban Outfitters' share price has risen 187% and the stock is up more than 4,350% since going public back in 1993.

Yet despite the strong returns and durability of the stock, Urban Outfitters currently has a market capitalization of only $6 billion U.S., making it a small-cap concern.

Additionally, URBN stock does not look overvalued right now despite its bull run. Shares are currently trading at 13 times future earnings estimates.

That's well-below the current forward price-to-earnings (P/E) ratio of 22.8 times among companies listed in the benchmark S&P 500 index.

Analysts are quick to highlight Urban Outfitters' steady returns and its reasonable valuation, noting that the company's strength lies in its continued ability to appeal to young, urban consumers who have discretionary income.

Urban Outfitters has been a standout among retail stocks over the past few years, managing to continue posting strong financial results even as evidence mounts of a global economic slowdown.

With the stock market close to all-time highs and many stock valuations at nosebleed levels, URBN stock offers an attractive mix of growth and valuation that should appeal to investors.