Here's How Carter's (CRI) is Placed Ahead of Q4 Earnings

Zacks Equity Research

Carter's, Inc. CRI is slated to report fourth-quarter 2019 results on Feb 24, before the opening bell. In the trailing four quarters, the company’s earnings outperformed the Zacks Consensus Estimate by 16.1%, on average. We note that it delivered a positive earnings surprise of 10.7% in the last reported quarter.

The Zacks Consensus Estimate for fourth-quarter earnings has remained unchanged at $2.88 over the past 30 days. This suggests an increase of 1.4% from the year-ago period’s reported figure. Further, the consensus mark for revenues is pegged at $1,102 million, indicating growth of 1.1% from the figure reported in the year-ago quarter.

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

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


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

Key Factors to Note

Carter’s has been gaining from favorable U.S. and Canadian Retail businesses. Also, the company is on track with its Retail strategy that focuses on improving store productivity, enhancing product offerings, strengthening e-commerce business with speed up deliveries and the launch of same-date pickup service for online orders. Moreover, it is benefiting from enhanced loyalty program and improved personalization. The company is also gaining from its Simple Joys brand, which includes a wide range of products for newborns and toddlers.

On the last earning call, management guided top-line growth of roughly 1% for the fourth quarter with adjusted earnings increase of nearly 1% from $2.84 reported in fourth-quarter 2018. Moreover, the company projected comparable sales growth of low single digit in both U.S. and Canadian retail businesses. Management had earlier highlighted that due to the slow start to fall selling, it tempered growth estimates for sales and profitability for the fourth quarter.

Again, due to strong demand for fall seasonal product during the third quarter, management projected low single-digits decline in U.S. wholesale net sales. Further, the company is exposed to tariff threats, due to the introduction of tariffs on List 4 goods. It had earlier guided tariff impact of around $4 million in the fourth quarter. Also, adverse currency rates are hurting the company’s performance.

What the Zacks Model Unveils

Our proven model doesn’t predict 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. But that’s not the case here.

Carter's carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combinations

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

G-III Apparel Group GIII has an Earnings ESP of +5.62% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores BURL has an Earnings ESP of +0.20% and a Zacks Rank #2.

Ross Stores, Inc. ROST currently has an Earnings ESP of +0.09% and a Zacks Rank #2.

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Ross Stores, Inc. (ROST) : Free Stock Analysis Report
 
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