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Should Value Investors Buy Carter's (CRI) Stock?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Carter's (CRI - Free Report) is a stock many investors are watching right now. CRI is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 11.92, which compares to its industry's average of 19.32. Over the last 12 months, CRI's Forward P/E has been as high as 14.58 and as low as 7.27, with a median of 10.72.

Investors should also recognize that CRI has a P/B ratio of 1.33. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.27. Over the past year, CRI's P/B has been as high as 3.16 and as low as 1.01, with a median of 1.73.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CRI has a P/S ratio of 0.4. This compares to its industry's average P/S of 0.83.

Finally, we should also recognize that CRI has a P/CF ratio of 4.97. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 12.64. Within the past 12 months, CRI's P/CF has been as high as 8.34 and as low as 3.76, with a median of 5.40.

These are only a few of the key metrics included in Carter's's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, CRI looks like an impressive value stock at the moment.

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