Stock Analysis

What Does Carter's, Inc.'s (NYSE:CRI) Share Price Indicate?

NYSE:CRI
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While Carter's, Inc. (NYSE:CRI) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Carter's’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Carter's

What Is Carter's Worth?

Carter's appears to be overvalued by 23% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$71.34 on the market compared to my intrinsic value of $57.95. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that Carter's’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Carter's?

earnings-and-revenue-growth
NYSE:CRI Earnings and Revenue Growth July 10th 2023

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 8.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Carter's, at least in the short term.

What This Means For You

Are you a shareholder? CRI’s future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe CRI should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on CRI for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Carter's as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 2 warning signs with Carter's, and understanding them should be part of your investment process.

If you are no longer interested in Carter's, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.