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Solid Demand & Online Growth to Aid Carter's (CRI) Q4 Earnings

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Carter's, Inc. CRI is likely to see an increase in the top line from the year-ago quarter’s reported figure, when it reports fourth-quarter 2021 earnings on Feb 25, before the opening bell. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $1,025 million, indicating an increase of 3.5% from the figure reported in the year-ago quarter.

Although the Zacks Consensus Estimate for fourth-quarter earnings has increased 2 cents in the past 30 days to $2.03, the same suggests a fall of 17.5% from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate for 2021’s sales and earnings per share suggests growth of 14% and 82.9%, respectively, from the year-ago period's reported numbers.

The branded marketer of apparel, exclusively for babies and children in North America, has a trailing four-quarter earnings surprise of 191.6%, on average. In the last reported quarter, the company’s bottom line surpassed the Zacks Consensus Estimate by 17%.

Carter's, Inc. Price and EPS Surprise

Carter's, Inc. Price and EPS Surprise
Carter's, Inc. Price and EPS Surprise

Carter's, Inc. price-eps-surprise | Carter's, Inc. Quote

Factors to Note

Carter’s has been gaining from high demand, price realization, productivity improvements, and cost-management initiatives. Higher demand for its brands across all channels is expected to have aided the company’s performance in the fourth quarter.

On its last reported quarter’s earnings call, management noted that the fourth quarter started on a solid note. It anticipated sales of $3.45 billion for 2021, with sales growth of 98% from the pre-pandemic level. CRI also expected fourth-quarter sales of $1,025 million.

The company’s enhanced e-commerce capabilities and increased investments to speed up deliveries bode well. It has been witnessing a solid online performance, driven by expanded omnichannel facilities, including curbside pickup, same-day pickup, buy online and pick up at store, and ship from store, along with easy access to a broad array of online products when shopping in stores. The company’s e-commerce penetration in the United States is anticipated to have risen 40% in 2021, suggesting growth from less than 32% reported in 2019. International e-commerce sales are expected to have exceeded $100 million in 2021.

On the flip side, Carter’s has been witnessing higher costs related to compensation provisions, brand marketing and technology initiatives. Higher freight charges, particularly air freight, are also likely to have been deterrents. It has also been witnessing direct costs, including health and safety-related expenses stemming from the COVID-19 crisis.

On its last reported quarter’s earnings call, management anticipated costs related to additional protective equipment and cleaning supplies of $3.7 million and $0.2 million for 2021 and the fourth quarter, respectively. The company also predicted $2.5 million of restructuring costs for 2021. Alongside these, Carter’s expected lingering effects of the pandemic, including supply-chain disruption and inflation, as well as higher production and transportation delays.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Carter's this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Carter's currently has a Zacks Rank #3 and an Earnings ESP of +1.48%.

Other Stocks With Favorable Combination

Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:

Rent-A-Center RCII currently has an Earnings ESP of +3.93% and a Zacks Rank of 3. The company is likely to register an increase in the bottom line when it reports fourth-quarter 2021. The Zacks Consensus Estimate for quarterly earnings moved up 1.3% to $1.58 per share in the past 30 days, suggesting 53.4% growth from the year-ago quarter’s reported number. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rent-A-Center’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.2 billion, which suggests a rise of 67% from the figure reported in the prior-year quarter. RCII has delivered an earnings beat of 10.1%, on average, in the trailing four quarters.

PVH Corp PVH has an Earnings ESP of +0.20% and a Zacks Rank of 3 at present. The company is likely to register an increase in the bottom line when it reports fourth-quarter fiscal 2021 results. The Zacks Consensus Estimate for quarterly earnings has been unchanged at $1.98 per share in the past 30 days, suggesting a surge of 621.1% from the year-ago quarter’s reported number.

PVH Corp’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.39 billion, which suggests a rise of 14.4% from the figure reported in the prior-year quarter. PVH has delivered an earnings beat of 72.3%, on average, in the trailing four quarters.

Vail Resorts MTN currently has an Earnings ESP of +5.48% and a Zacks Rank #3. MTN is anticipated to register top-line growth when it reports third-quarter fiscal 2021 results. The Zacks Consensus Estimate for the quarterly revenues is pegged at $195.1 million, indicating an improvement of 48.1% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Vail Resorts' bottom line has been unchanged in the past 30 days to $5.73 per share. This suggests an improvement of 58.3% from $3.62 reported in the year-ago quarter. MTN has delivered an earnings beat of 17.3%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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RentACenter, Inc. (RCII) : Free Stock Analysis Report

PVH Corp. (PVH) : Free Stock Analysis Report

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Vail Resorts, Inc. (MTN) : Free Stock Analysis Report

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