Carter's Inc (CRI, Financial) shares experienced a significant drop, decreasing by 16.19% to a price of $43.63. This decline follows the company's announcement of disappointing financial performance for Q4 2024, where both the full-year and next quarter's EPS guidance failed to meet Wall Street expectations. Despite growth in the U.S. Wholesale segment, a flat overall revenue was reported as declines in the U.S. Retail and International segments offset it.
The company's adjusted EBITDA showed a downward trend, and profit margins experienced a squeeze, primarily due to increased freight costs and heightened promotional spending. Management pointed out ongoing macroeconomic pressures, high interest rates, and planned pricing investments as the key challenges affecting Carter's performance.
From a valuation perspective, Carter's Inc (CRI, Financial) appears to be significantly undervalued when considering the GF Value of $70.76, indicating potential upside compared to its current market price. The company boasts a low Price-to-Earnings (PE) ratio of 6.9, which is close to its 10-year low, suggesting value for long-term investors. Furthermore, the Price-to-Book (PB) ratio of 1.9 also approaches its 10-year low, reinforcing the stock's attractive valuation.
Carter's strong financial health is underscored by an Altman Z-Score of 3.17, indicating a lower risk of bankruptcy, and a Piotroski F-Score of 7, suggesting robust financial strength. Additionally, the company shows signs of profitability with a healthy Operating Margin, although the recent quarter's performance reflected some operational challenges.
For income-focused investors, Carter's Inc (CRI, Financial) offers an attractive dividend yield of 7.37%, which is close to its 10-year high, providing a steady income stream. Despite the current downturn, the stock's valuation metrics and financial strength suggest potential for recovery and long-term growth.
