There's been a notable change in appetite for Carter's, Inc. (NYSE:CRI) shares in the week since its third-quarter report, with the stock down 16% to US$55.81. Revenues were US$758m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$1.62 were also better than expected, beating analyst predictions by 18%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following last week's earnings report, Carter's' five analysts are forecasting 2025 revenues to be US$2.82b, approximately in line with the last 12 months. Statutory earnings per share are forecast to tumble 20% to US$5.00 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$2.83b and earnings per share (EPS) of US$5.13 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
The consensus price target held steady at US$57.00, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Carter's, with the most bullish analyst valuing it at US$65.00 and the most bearish at US$50.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2025 compared to the historical decline of 3.2% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.0% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Carter's to suffer worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Carter's' revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$57.00, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Carter's going out to 2026, and you can see them free on our platform here..
You still need to take note of risks, for example - Carter's has 2 warning signs (and 1 which can't be ignored) we think you should know about.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
