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Should Value Investors Buy Carter's (CRI) Stock?

Zacks Equity Research
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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Carter's (CRI). CRI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 14.88, while its industry has an average P/E of 24.61. CRI's Forward P/E has been as high as 17.42 and as low as 11.40, with a median of 14.64, all within the past year.

Investors will also notice that CRI has a PEG ratio of 1.86. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CRI's industry currently sports an average PEG of 2.02. CRI's PEG has been as high as 1.96 and as low as 1.40, with a median of 1.66, all within the past year.

Another valuation metric that we should highlight is CRI's P/B ratio of 5.32. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. CRI's current P/B looks attractive when compared to its industry's average P/B of 12.66. Over the past year, CRI's P/B has been as high as 6.74 and as low as 4.13, with a median of 5.50.

Finally, investors should note that CRI has a P/CF ratio of 12.36. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. CRI's P/CF compares to its industry's average P/CF of 39.62. Within the past 12 months, CRI's P/CF has been as high as 14.25 and as low as 9.32, with a median of 12.01.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Carter's is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CRI feels like a great value stock at the moment.


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