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Carter's Stock Trading at a Discount: What's the Next Best Move?
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Key Takeaways
Carter's trades at 9.20X forward earnings, below its industry and Consumer Discretionary averages.
CRI posted 2% U.S. Retail sales growth, 5% comparable growth and a 12% increase in wholesale sales.
CRI expects 2026 net sales to rise 2-3%, while adjusted operating income grows in low-to-mid single digits.
Carter's, Inc. (CRI - Free Report) emerges as an attractive value opportunity in the Shoes and Retail Apparel industry, trading at a forward 12-month price-to-earnings ratio of 9.20X, significantly below the industry average of 17.56X and the Consumer Discretionary average of 15.22X. The stock is undervalued compared with its industry peers, offering compelling value to investors looking for exposure to the Consumer Discretionary sector.
Image Source: Zacks Investment Research
In terms of share performance, CRI has delivered solid gains over the past year, advancing 7.8%. The stock outperformed both the industry and the sector, which slipped 46.3% and 19.1%, respectively, in the same time frame. Meanwhile, the S&P 500 increased 15.6%.
Image Source: Zacks Investment Research
A Deep Dive Into CRI Stock
Carter’s is working to strengthen its business around a more consumer-centric, data-driven and brand-building approach. The company is focusing on using consumer insights to shape products, shopping experiences and marketing initiatives, with the broader objective of building stronger customer relationships and increasing lifetime value. It also sees opportunities to leverage the recognition and trust associated with the Carter’s and OshKosh brands.
Improving momentum in U.S. Retail has been another encouraging factor. Retail net sales increased 2% in the second quarter, while comparable sales grew 5%, marking the fifth consecutive quarter of comparable-sales growth. Sales increased across the company’s core age segments, led by baby products. Consumers responded well when Carter’s delivered the right combination of newness, style, quality and value.
Wholesale trends have also strengthened. U.S. Wholesale sales increased 12% year over year, supported by higher average unit retail and unit growth. Carter’s Child of Mine and Just One You contributed to growth, while Little Planet and Skip Hop also performed well.
Are Carter’s Strategic Efforts Paying Off?
Carter’s investments in digital capabilities and customer engagement are showing progress. E-commerce comparable sales increased at a double-digit rate in the second quarter, marking the fourth consecutive quarter of growth. The increase was supported by strong traffic and remained profitable. Digital enhancements include improved outfit functionality, AI-optimized product reviews, passwordless login and an upgraded AI customer chat platform. Customers using these features have shown increased visits, higher conversion and more units per transaction.
Marketing initiatives are also supporting customer acquisition, particularly among Gen Z families. The company has been using partnerships, cultural moments and storytelling to increase engagement. Its Umbro collaboration, for example, generated strong consumer engagement and over-indexed with Gen Z and multicultural customers, while purchasers of the collection bought higher-priced products and more units per transaction.
At the same time, Carter’s continues to focus on product relevance and value. For the second half, its assortment is centered on areas such as Baby, opening price points, OshKosh denim and sleepwear. The company is also planning continued marketing investments and additional improvements to the customer experience across channels.
What Does Carter’s Outlook Suggest?
Carter’s outlook points to continued growth, although the company remains cautious about consumer spending and wholesale demand. For 2026, Carter’s expects net sales to increase 2-3%, with U.S. Retail sales projected to grow in the low-single-digit range and comparable sales in the mid-single-digit range. International sales are expected to rise in the mid-single digits, while adjusted operating income is still projected to grow in the low- to mid-single digits.
The company also expects gross margin improvement in the third quarter, supported by a more favorable retail mix, pricing gains and the anniversary of elevated tariff costs. However, promotional activity, inflation and consumer sentiment remain key variables to watch heading into the holiday season.
How to Play CRI Stock Now?
Carter’s improving retail and wholesale trends, growing digital engagement, stronger customer acquisition efforts and continued focus on brand building provide support to its turnaround strategy. Although consumer caution, promotional pressures and tariff uncertainty remain factors to watch, the company’s expectations for sales growth and higher adjusted operating income suggest that operating momentum could continue. CRI’s discounted valuation further strengthens its appeal from a value perspective. The stock currently sports a Zacks Rank #1 (Strong Buy), reflecting a favorable earnings estimate revision trend and supporting a positive investment case for investors seeking exposure to the Consumer Discretionary space.
Other Stocks to Consider
Vince Holding Corp. (VNCE - Free Report) provides luxury apparel and accessories in the United States and internationally. It operates through Vince Wholesale and Vince Direct-to-Consumer segments. At present, the company flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for VNCE’s current fiscal-year sales and earnings implies growth of 12.7% and 172.7%, respectively, from the year-ago reported figures. VNCE has delivered a trailing four-quarter earnings surprise of 561.4%, on average.
Kontoor Brands, Inc. (KTB - Free Report) , a lifestyle apparel company, designs, manufactures, procures, sells and licenses apparel, footwear and accessories, primarily under the Wrangler, Lee and Helly Hansen brands. At present, KTB carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for KTB’s current fiscal-year sales and earnings implies a decline of 14.3% and 6.1%, respectively, from the year-ago figures. KTB delivered a trailing four-quarter earnings surprise of 21.4%, on average.
Savers Value Village, Inc. (SVV - Free Report) , a thrift operator, sells second-hand merchandise in retail stores in the United States, Canada and Australia. SVV currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for SVV’s current financial-year sales and earnings is expected to rise 6.1% and 6.7%, respectively, from the corresponding year-ago reported figures. SVV delivered a trailing four-quarter negative earnings surprise of 1.6%, on average.
View the Zacks #1 Rank List
Image: Bigstock
Carter's Stock Trading at a Discount: What's the Next Best Move?
Key Takeaways
Carter's, Inc. (CRI - Free Report) emerges as an attractive value opportunity in the Shoes and Retail Apparel industry, trading at a forward 12-month price-to-earnings ratio of 9.20X, significantly below the industry average of 17.56X and the Consumer Discretionary average of 15.22X. The stock is undervalued compared with its industry peers, offering compelling value to investors looking for exposure to the Consumer Discretionary sector.
Image Source: Zacks Investment Research
In terms of share performance, CRI has delivered solid gains over the past year, advancing 7.8%. The stock outperformed both the industry and the sector, which slipped 46.3% and 19.1%, respectively, in the same time frame. Meanwhile, the S&P 500 increased 15.6%.
Image Source: Zacks Investment Research
A Deep Dive Into CRI Stock
Carter’s is working to strengthen its business around a more consumer-centric, data-driven and brand-building approach. The company is focusing on using consumer insights to shape products, shopping experiences and marketing initiatives, with the broader objective of building stronger customer relationships and increasing lifetime value. It also sees opportunities to leverage the recognition and trust associated with the Carter’s and OshKosh brands.
Improving momentum in U.S. Retail has been another encouraging factor. Retail net sales increased 2% in the second quarter, while comparable sales grew 5%, marking the fifth consecutive quarter of comparable-sales growth. Sales increased across the company’s core age segments, led by baby products. Consumers responded well when Carter’s delivered the right combination of newness, style, quality and value.
Wholesale trends have also strengthened. U.S. Wholesale sales increased 12% year over year, supported by higher average unit retail and unit growth. Carter’s Child of Mine and Just One You contributed to growth, while Little Planet and Skip Hop also performed well.
Are Carter’s Strategic Efforts Paying Off?
Carter’s investments in digital capabilities and customer engagement are showing progress. E-commerce comparable sales increased at a double-digit rate in the second quarter, marking the fourth consecutive quarter of growth. The increase was supported by strong traffic and remained profitable. Digital enhancements include improved outfit functionality, AI-optimized product reviews, passwordless login and an upgraded AI customer chat platform. Customers using these features have shown increased visits, higher conversion and more units per transaction.
Marketing initiatives are also supporting customer acquisition, particularly among Gen Z families. The company has been using partnerships, cultural moments and storytelling to increase engagement. Its Umbro collaboration, for example, generated strong consumer engagement and over-indexed with Gen Z and multicultural customers, while purchasers of the collection bought higher-priced products and more units per transaction.
At the same time, Carter’s continues to focus on product relevance and value. For the second half, its assortment is centered on areas such as Baby, opening price points, OshKosh denim and sleepwear. The company is also planning continued marketing investments and additional improvements to the customer experience across channels.
What Does Carter’s Outlook Suggest?
Carter’s outlook points to continued growth, although the company remains cautious about consumer spending and wholesale demand. For 2026, Carter’s expects net sales to increase 2-3%, with U.S. Retail sales projected to grow in the low-single-digit range and comparable sales in the mid-single-digit range. International sales are expected to rise in the mid-single digits, while adjusted operating income is still projected to grow in the low- to mid-single digits.
The company also expects gross margin improvement in the third quarter, supported by a more favorable retail mix, pricing gains and the anniversary of elevated tariff costs. However, promotional activity, inflation and consumer sentiment remain key variables to watch heading into the holiday season.
How to Play CRI Stock Now?
Carter’s improving retail and wholesale trends, growing digital engagement, stronger customer acquisition efforts and continued focus on brand building provide support to its turnaround strategy. Although consumer caution, promotional pressures and tariff uncertainty remain factors to watch, the company’s expectations for sales growth and higher adjusted operating income suggest that operating momentum could continue. CRI’s discounted valuation further strengthens its appeal from a value perspective. The stock currently sports a Zacks Rank #1 (Strong Buy), reflecting a favorable earnings estimate revision trend and supporting a positive investment case for investors seeking exposure to the Consumer Discretionary space.
Other Stocks to Consider
Vince Holding Corp. (VNCE - Free Report) provides luxury apparel and accessories in the United States and internationally. It operates through Vince Wholesale and Vince Direct-to-Consumer segments. At present, the company flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for VNCE’s current fiscal-year sales and earnings implies growth of 12.7% and 172.7%, respectively, from the year-ago reported figures. VNCE has delivered a trailing four-quarter earnings surprise of 561.4%, on average.
Kontoor Brands, Inc. (KTB - Free Report) , a lifestyle apparel company, designs, manufactures, procures, sells and licenses apparel, footwear and accessories, primarily under the Wrangler, Lee and Helly Hansen brands. At present, KTB carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for KTB’s current fiscal-year sales and earnings implies a decline of 14.3% and 6.1%, respectively, from the year-ago figures. KTB delivered a trailing four-quarter earnings surprise of 21.4%, on average.
Savers Value Village, Inc. (SVV - Free Report) , a thrift operator, sells second-hand merchandise in retail stores in the United States, Canada and Australia. SVV currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for SVV’s current financial-year sales and earnings is expected to rise 6.1% and 6.7%, respectively, from the corresponding year-ago reported figures. SVV delivered a trailing four-quarter negative earnings surprise of 1.6%, on average.