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The most recent earnings release Carter's, Inc.'s (NYSE:CRI) announced in December 2018 showed that the company endured a minor headwind with earnings falling from US$300m to US$280m, a change of -6.8%. Below, I've laid out key numbers on how market analysts perceive Carter's's earnings growth outlook over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts' outlook for next year seems rather subdued, with earnings growing by a single digit 6.9%. The growth outlook in the following year seems much more optimistic with rates arriving at double digit 14% compared to today’s earnings and decreases to US$307m by 2022.
While it’s useful to understand the growth rate year by year relative to today’s value, it may be more valuable evaluating the rate at which the earnings are moving every year, on average. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of Carter's's earnings trajectory over time, be more volatile. To compute this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 2.1%. This means, we can presume Carter's will grow its earnings by 2.1% every year for the next couple of years.
For Carter's, I've put together three relevant aspects 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 CRI 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 CRI is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CRI? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.