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Carters (CRI - Free Report) is a Zacks Rank #5 (Strong Sell) that is the largest marketer of branded apparel and related products for babies and young children. With the exception of a few outliers, the stock had traded sideways since 2015. So, after a disappointing quarter, investors are questioning if they should stick with the stock.
More about Carters
If you have a child, you know the brands in Carter’s stores. Oshkosh B’gosh, Just One You, Child of Mine, Skip Hope and Simple Joys are some of the names the stores sell.
The company is headquartered in Atlanta, GA and was founded in 1865. Carters is valued around $3.5 Billion and has Zacks Style Scores of “A” in Value and “A” in Growth, and “B” in Value.
While fundamentally the company typically does well, the most recent quarter was concerning and forced the stock lower by over 10%.
Q4 Earnings
On February 26th Carter’s reported Q4 EPS, seeing a 16% miss. Revenues also came in below expectations and the company guided Q1 at $0.25 v the $0.72 expected. Carter’s also sees FY21 below expectations and sees revenues up only 5% on the year.
Some bad numbers came on the report, which was attributed to low foot traffic and supply chain disruptions. Retail sales were off 10%, US Wholesale sales off 17% and international sales were off 13%.
Estimates
Analyst dropped estimates after the earnings report, which likely caused the drop in the Zacks Rank. For the current quarter, the last 7 days have seen a fall in estimates from $0.72 to $0.26. For the current year, estimates have dropped from $6.67 to $4.68 over the same time period.
While these fall in estimates might spell disaster for a tech company, its out of the ordinary for Carters. Despite the miss, most analysts maintained their buy on the stock. But while investors aren’t giving up on the name, is likely isn’t worthy of your portfolio until there is a positive move in the charts.
The Technicals
CRI has been stuck in a 20-point range for six years. There was a move to all time highs at $129 back in 2018, but outside that and the March sell 2020 sell off, the stock has chopped between $80 and $100 since 2015.
Some investors might want to buy the bottom of this range, but until the stock gets back above the 200-day at $87.50 the bears have control. Even if the stock did manage higher, the 21-day is falling and the 50-day is at $94.
When you look at this sideways action, there really isn’t any motivation to put money to work here. The stock needs a catalyst and after the recent earnings report, it might be a while.
In Summary
Investors should give the stock and the company some time to turn the momentum. While the company has a great niche that makes it stand out vs other retailers, COVID and some underlying issues are disrupting Carter’s consistency.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%
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Bear of the Day: Carters (CRI)
Carters (CRI - Free Report) is a Zacks Rank #5 (Strong Sell) that is the largest marketer of branded apparel and related products for babies and young children. With the exception of a few outliers, the stock had traded sideways since 2015. So, after a disappointing quarter, investors are questioning if they should stick with the stock.
More about Carters
If you have a child, you know the brands in Carter’s stores. Oshkosh B’gosh, Just One You, Child of Mine, Skip Hope and Simple Joys are some of the names the stores sell.
The company is headquartered in Atlanta, GA and was founded in 1865. Carters is valued around $3.5 Billion and has Zacks Style Scores of “A” in Value and “A” in Growth, and “B” in Value.
While fundamentally the company typically does well, the most recent quarter was concerning and forced the stock lower by over 10%.
Q4 Earnings
On February 26th Carter’s reported Q4 EPS, seeing a 16% miss. Revenues also came in below expectations and the company guided Q1 at $0.25 v the $0.72 expected. Carter’s also sees FY21 below expectations and sees revenues up only 5% on the year.
Some bad numbers came on the report, which was attributed to low foot traffic and supply chain disruptions. Retail sales were off 10%, US Wholesale sales off 17% and international sales were off 13%.
Estimates
Analyst dropped estimates after the earnings report, which likely caused the drop in the Zacks Rank. For the current quarter, the last 7 days have seen a fall in estimates from $0.72 to $0.26. For the current year, estimates have dropped from $6.67 to $4.68 over the same time period.
While these fall in estimates might spell disaster for a tech company, its out of the ordinary for Carters. Despite the miss, most analysts maintained their buy on the stock. But while investors aren’t giving up on the name, is likely isn’t worthy of your portfolio until there is a positive move in the charts.
The Technicals
CRI has been stuck in a 20-point range for six years. There was a move to all time highs at $129 back in 2018, but outside that and the March sell 2020 sell off, the stock has chopped between $80 and $100 since 2015.
Some investors might want to buy the bottom of this range, but until the stock gets back above the 200-day at $87.50 the bears have control. Even if the stock did manage higher, the 21-day is falling and the 50-day is at $94.
When you look at this sideways action, there really isn’t any motivation to put money to work here. The stock needs a catalyst and after the recent earnings report, it might be a while.
In Summary
Investors should give the stock and the company some time to turn the momentum. While the company has a great niche that makes it stand out vs other retailers, COVID and some underlying issues are disrupting Carter’s consistency.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
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