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Oppenheimer Upgrades Carter’s Rating to ‘Outperform’

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Carter’s price movement

Carter’s (CRI) has a market cap of $4.9 billion. It rose by 2.6% to close at $93.86 per share on January 7, 2016. Carter’s price movement on a weekly, monthly, and YTD (year-to-date) basis is 3.8%, 6.5%, and 5.4%, respectively.

At times, the stock has broken support of all moving averages. Currently, Carter’s is trading 3.9% above its 20-day moving average, 5.7% above its 50-day moving average, and 2.2% below its 200-day moving average.

The First Trust Mid Cap Growth AlphaDEX ETF (FNY) invests 0.82% of its holdings in Carter’s. The ETF tracks a tiered and equal-weighted index of midcap growth stocks selected by S&P’s AlphaDEX selection methodology from the S&P 400. The YTD price movement of FNY is -2.5% as of January 6, 2016.

Carter’s competitors and their market caps are:

  • Target (TGT) – $45.5 billion
  • Gap (GPS) – $10.8 billion
  • Kohl’s (KSS) – $9.7 billion
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Oppenheimer upgrades Carter’s ratings

Oppenheimer upgraded Carter’s ratings from “perform” to “outperform” and set the price target at $108 per share. The company has a high projection for fiscal 2015’s adjusted EPS.

Carter’s performance in fiscal 3Q15

Carter’s (CRI) reported fiscal 3Q15 net sales of $849.8 million, a rise of 6.4% from the net sales of $798.9 million in fiscal 3Q14. In fiscal 3Q15, its net income and EPS (earnings per share) rose to $79.3 million and $1.51, respectively, from the net income and EPS of $65.9 million and $1.23, respectively, in fiscal 3Q14.

Meanwhile, in fiscal 3Q15, its accounts receivable rose by 6.1%, and finished goods inventories fell by 1.5% from the prior year. Its debt-to-equity ratio fell to 1.35 in fiscal 3Q15 from 1.40 in fiscal 3Q14. It’s declared a quarterly dividend of $0.22 per share on its common stock.

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Projections for fiscal 4Q15

The company has made the following projections for fiscal 4Q15:

  • net sales to fall by 2% from fiscal 4Q14
  • adjusted EPS in the range of $1.22 to $1.30

Projections for fiscal 2015

The company has made the following projections for fiscal 2015:

  • net sales to rise by ~4% over fiscal 2014
  • adjusted EPS to rise in the range of 13% to 15% above the adjusted EPS of $3.93 in fiscal 2014

Carter’s PE (price-to-earnings) and PBV (price-to-book value) ratios are 21.2x and 5.8x, respectively, as of January 7, 2016.

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