Carter's (CRI) Valuation Revisited After Aristotle Capital Boston Fully Exits Position Over Fundamental Concerns

Aristotle Capital Boston’s decision to fully exit Carter's (CRI), citing weakening fundamentals and a cloudy strategic path, put the stock back under the microscope for investors wondering whether the selloff has gone too far.

See our latest analysis for Carter's.

The latest move came after a tough stretch for investors, with Carter's year to date share price return sitting sharply negative. However, a roughly 6 percent 1 month share price gain hints that selling pressure may be easing, while longer term total shareholder returns remain deeply underwater.

If this kind of reset has you reconsidering where you put new money to work, it could be worth broadening your search and exploring fast growing stocks with high insider ownership.

With the share price down heavily over one and five years, yet bouncing in recent months, investors now face a key question: is Carter's still unfairly marked down, or are markets already pricing in any realistic recovery in growth?

Most Popular Narrative: 8.6% Overvalued

With Carter's last closing at $32.05 against a narrative fair value near $29.50, the widely followed outlook frames the stock as slightly ahead of fundamentals.

The analysts have a consensus price target of $24.6 for Carter's based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $28.0, and the most bearish reporting a price target of just $22.0.

Read the complete narrative.

Curious how shrinking margins, falling earnings, and a demanding future profit multiple can still justify today’s valuation? The narrative’s projections might surprise you.

Result: Fair Value of $29.50 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, international expansion into higher birth rate markets and ongoing product innovation could bolster revenue and margins and challenge today’s cautious valuation narrative.

Find out about the key risks to this Carter's narrative.

Another View: Market Ratio Points to Value

While the narrative fair value suggests Carter's is about 8.6 percent overvalued, its current price to earnings ratio of 13.5 times looks cheap against the US market at 19 times, peers at 39.9 times, and even its own fair ratio of 14.3 times. If sentiment stabilizes, could the share price drift back toward that fair ratio?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Carter's Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom view in minutes, Do it your way.

A great starting point for your Carter's research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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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.

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