A Closer Look at Carter's Stock Before Earnings

Carter's, Inc. (NYSE:CRI) is the largest branded marketer in North America of apparel and related products exclusively for babies and children. The company owns the Carter's, OshKosh B'gosh, and Skip Hop brands. Carter's Child of Mine brand is available at Walmart, the Just One You brand is available at Target, and the Simple Joys brand is available on Amazon.

Carter’s is scheduled to release its third-quarter earnings results before the open on Thursday, Oct. 21. Analysts anticipate that the children's apparel company will report earnings of $1.73 per share in tomorrow's earnings report. Carter's stock has a forward price-earnings ratio of 14.97, which is a good value but signals an expected decrease in earnings. This has been a common theme for the retail company over the past couple of years.

Carter’s stock is up 21.1% year-over-year, and has added 7.3% in 2021. The equity is eyeing its seventh-straight win today, marking its longest streak since February. Overhead pressure at the 120-day moving average is keeping some of these gains in check, however. Moreover, Carter's offers a forward dividend of $1.60 and a dividend yield of 1.61%.

Overall, CRI holds a decent valuation, given Carter's stock’s price-earnings ratio of 12.91. On the top-line, Carter's maintained constant growth prior to the Covid-19 pandemic and the retail brand has now increased its revenues 12% since fiscal 2020, partially recovering from the 14% decline CRI experienced between fiscal 2019 and fiscal 2020.

However, Carter’s fundamentals do suggest a lack of consistency on the bottom line. Although CRI's trailing 12-month net income is up a massive 209% since fiscal 2020, Carter’s had previously posted three consecutive years of bottom-line declines. Between fiscal 2017 and fiscal 2020, CRI's net income dropped a whopping 64%. In general, Carter’s stock presents an elevated level of risk for a value investment.