In December 2017, Carter’s Inc (NYSE:CRI) released its most recent earnings update. Generally, analyst forecasts seem fairly subdued, with earnings expected to grow by 6.29% in the upcoming year compared with the higher past 5-year average growth rate of 13.32%. Presently, with earnings at US$300.36M, we should see this growing to US$319.26M by 2019. Below is a brief commentary around Carter’s’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here. See our latest analysis for Carter’s
Exciting times ahead?
Over the next three years, it seems the consensus view of the 10 analysts covering CRI is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of CRI’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 4.94% based on the most recent earnings level of US$300.36M to the final forecast of US$359.57M by 2021. EPS reaches $7.79 in the final year of forecast compared to the current $6.31 EPS today. Growth in earnings appears to be a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. Margins is currently sitting at 8.83%, which is expected to expand to 9.16% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Carter’s, there are three essential factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Carter’s worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Carter’s is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Carter’s? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.