Carter's, Inc. Yearly Results: Here's What Analysts Are Forecasting For Next Year
It's been a mediocre week for Carter's, Inc. (NYSE:CRI) shareholders, with the stock dropping 17% to US$91.72 in the week since its latest full-year results. It looks like the results were a bit of a negative overall. While revenues of US$3.5b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 4.1% to hit US$5.85 per share. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Carter's after the latest results.
Check out our latest analysis for Carter's
Taking into account the latest results, the latest consensus from Carter's's eight analysts is for revenues of US$3.61b in 2020, which would reflect an okay 2.5% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to climb 15% to US$6.78. Before this earnings report, analysts had been forecasting revenues of US$3.63b and earnings per share (EPS) of US$7.02 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share forecasts for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$109, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Carter's, with the most bullish analyst valuing it at US$118 and the most bearish at US$95.00 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Carter's's performance in recent years. It's pretty clear that analysts expect Carter's's revenue growth will slow down substantially, with revenues next year expected to grow 2.5%, compared to a historical growth rate of 4.2% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 7.2% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Carter's.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$109, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Carter's analysts - going out to 2023, and you can see them free on our platform here.
You can also view our analysis of Carter's's balance sheet, and whether we think Carter's is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
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