Carter's, Inc. (CRI Quick QuoteCRI - Free Report) is expected to report top-line growth when it reports fourth-quarter 2025 results. The branded marketer of apparel, exclusively for babies and children in North America, is likely to witness a decline in the bottom line in the quarter to be reported.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $916.4 million, indicating a rise of 6.6% from the figure reported in the year-ago quarter. The consensus estimate for quarterly earnings, which has increased 2.4% to $1.70 per share in the past seven days, indicates a decrease of 28.9% from the year-ago quarter’s reported figure.

The company has a negative trailing four-quarter earnings surprise of 0.5%, on average. In the last reported quarter, CRI’s bottom line missed the Zacks Consensus Estimate by 5.1%.

Factors to Note

Carter’s is likely to benefit from its leading position in the baby and children’s apparel market, with strong brand recognition, a wide distribution network and a focus on quality and value-driven products. Also, measures like improved pricing, optimized inventory management and robust e-commerce capabilities are tailwinds. The company’s direct-to-consumer strategy strengthens its position by boosting margins, deepening customer relationships and generating valuable consumer insights.

Recently, Carter's announced preliminary net sales results for the fourth quarter. On a preliminary, unaudited basis, fourth-quarter 2025 consolidated net sales rose a high single-digit percentage year over year. U.S. Retail segment net sales increased in the high single-digits, while U.S. Retail comparable sales grew in mid-single-digits on robust e-commerce channel demand. Retail stores recorded positive comparable sales in the final quarter. Average unit retail pricing also jumped in mid-single-digits. Net sales in the U.S. Wholesale segment also rose in the low single-digits and the International segment saw high single-digit growth.

CRI benefits from a diversified distribution network that includes retail stores, e-commerce platforms and wholesale partnerships with major department stores and online retailers. The company’s notable efforts include expanded omnichannel facilities, including curbside pickup, same-day pickup, buy online and pickup at store, and ship from store. Strength across its U.S. Retail and International segments is acting as a tailwind. Our model forecasts International net sales to increase 8% in the fourth quarter.

However, Carter's continues to operate in a challenging macroeconomic and retail landscape, marked by ongoing inflationary pressures and constrained discretionary spending, which is weighing on apparel demand. The company has been witnessing selling, general and administrative (SG&A) expenses on higher store-based expenses, and increased marketing investment.  In addition, heightened tariff pressures have been acting as deterrents. Our model anticipates adjusted SG&A expenses to grow 10.6% for the fourth quarter of 2025.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Carter's this season. 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. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Carter's currently has an Earnings ESP of -1.48% and a Zacks Rank of 1.

Valuation Picture

From a valuation perspective, Carter’s offers an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 17.01x, which is below the five-year high of 21.14x and the Shoes and Retail Apparel industry’s average of 26.74x, the stock offers compelling value for investors seeking exposure to the sector.

The recent market movements show that CRI’s shares have risen 43.6% in the past three months compared with the industry's 4.3% growth.

Stocks With the Favorable Combination

Here are some companies, which according to our model, have the right combination of elements to beat on earnings this reporting cycle.

Interparfums, Inc. (IPAR Quick QuoteIPAR - Free Report) currently has an Earnings ESP of +2.56% and a Zacks Rank of 2. IPAR is likely to register a top-line increase when it reports fourth-quarter 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $385.9 billion, indicating a 6.8% rise from the figure reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for IPAR’s fourth-quarter earnings is pegged at 78 cents a share, implying a 4.9% decrease from the year-earlier quarter. IPAR has a trailing four-quarter average earnings surprise of 5%.

lululemon athletica (LULU Quick QuoteLULU - Free Report) currently has an Earnings ESP of +0.88% and a Zacks Rank of 3. LULU is likely to register a top-line decrease when it reports fourth-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.6 billion, indicating a 0.2% drop from the figure reported in the year-ago quarter.

The consensus estimate for LULU’s fourth-quarter earnings is pegged at $4.75 a share, implying a 22.6% decrease from the year-earlier quarter. LULU has a trailing four-quarter average earnings surprise of 7.8%.

Carnival (CCL Quick QuoteCCL - Free Report) currently has an Earnings ESP of +0.09% and a Zacks Rank of 2. CCL is likely to register growth in its top and bottom lines when it reports first-quarter fiscal 2026 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $6.1 billion, indicating a 5% increase from the figure in the year-ago quarter.
 
The consensus estimate for CCL’s earnings is pegged at 18 cents per share, implying a 38.5% surge from the year-ago quarter’s actual. CCL displays a trailing four-quarter earnings surprise of 160%, on average.