Shares of Urban Outfitters (URBN 0.18%) were down by about 14% as of 11:25 a.m. ET Wednesday after the teen clothier reported a fourth-quarter earnings miss Tuesday afternoon.

Wall Street had been expecting the retailer to report a profit of $0.74 per share (adjusted for one-time items) on sales of $1.5 billion. Urban Outfitters nailed the sales target, but missed by a nickel on adjusted earnings, reporting $0.69 per share.

Good news: Urban Outfitters missed on earnings

On a GAAP (generally accepted accounting principles) basis, Urban Outfitters' earnings were even lower. As management explained in the earnings report, GAAP profits for Q4 were only $0.50 per share, hurt by "store impairment and lease abandonment charges, an asset impairment charge and a change in revenue recognition method for Nuuly."

And yet, the news still wasn't as bad as Wednesday's sell-off would suggest. Year over year, Urban Outfitters' sales grew 7%. And while its GAAP quarterly earnings weren't as strong as the adjusted number, they were still up 47% year over year, which hardly seems like a result to complain about.

It's also worth noting that these figures were consistent with the company's strength throughout 2023. For the year, sales also grew more than 7%, and earnings grew by 79% to $3.05 per share.

Is Urban Outfitters stock a buy?

Can Urban Outfitters keep up the good work in 2024? Management declined to give any specific guidance on sales or earnings for the year ahead, but CEO Richard Haybe did note that "early spring" sales seem to be hitting well with clothes shoppers, which he says "bodes well for continued sales growth in the first quarter."

On the one hand, it seems unlikely the company can continue translating 7% sales growth into 70%-plus profit growth over the long term. But analysts polled by S&P Global Market Intelligence do anticipate at least 18% annualized earnings growth over the next five years. That seems more than enough growth to justify the stock's trailing P/E ratio of 13.2, and its enterprise-value-to-free-cash-flow ratio of 14.2 as well.

So long as Urban Outfitters hits its growth targets, I think its valuation is plenty cheap enough to recommend it as a continued buy.