Price movement

Carter’s (CRI) has a market cap of $5.1 billion. It fell by 9.5% to close at $100.84 per share on July 27, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -8.9%, -0.55%, and 14.0%, respectively, on the same day. CRI is trading 7.0% below its 20-day moving average, 3.7% below its 50-day moving average, and 4.1% above its 200-day moving average.

How Did Carter’s Perform in 2Q16?

Related ETF and peers

The Vanguard Small-Cap ETF (VB) invests 0.18% of its holdings in Carter’s. The ETF tracks the CRSP US Small Cap Index. The market-cap-weighted index includes the bottom 2%–15% of the investable universe. The YTD price movement of VB was 9.9% on July 27.

The market caps of Carter’s competitors are as follows:

  • Target (TGT) — $45.0 billion
  • The Gap (GPS) — $10.1 billion
  • Kohl’s (KSS) — $7.5 billion

Performance of Carter’s in fiscal 2Q16

Carter’s reported fiscal 2Q16 net sales of $639.5 million, a rise of 4.4% over the net sales of $612.8 million in fiscal 2Q15. The company’s gross profit margin and operating income rose by 2.9% and 1.9%, respectively, between fiscals 2Q15 and 2Q16.

Its net income and EPS (earnings per share) rose to $36.2 million and $0.71, respectively, in fiscal 2Q16, compared with $36.1 million and $0.68, respectively, in fiscal 2Q15. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) and adjusted EPS of $81.3 million and $0.72, respectively, in fiscal 2Q16, a fall of 1.8% and 1.4% from fiscal 2Q15.

Carter’s cash and cash equivalents fell by 46.2% and its finished goods inventories rose by 25.0% between fiscals 4Q15 and 2Q16. Its current ratio fell to 3.8x and its debt-to-equity ratio rose to 1.5x in fiscal 2Q16, compared with 4.3x and 1.3x, respectively, in fiscal 4Q15.

Projections

The company has made the following projections for fiscal 3Q16 and fiscal 2016:

Fiscal 2Q16

  • net sales growth: ~6% to 7%
  • adjusted EPS growth: ~6% to 10%

Fiscal 2016

  • net sales growth: ~5% to 6%
  • adjusted EPS growth: ~10%

In the next part, we’ll take a look at Gildan Activewear.

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