Carter's Q4 Earnings on the Horizon: Key Factors to Note

Carter's, Inc. CRI is scheduled to release fourth-quarter 2024 results on Feb. 25, before the opening bell. The branded marketer of apparel, exclusively for babies and children in North America, is likely to witness a decline in the bottom and top lines when it reports the quarterly numbers.The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $828.5 million, indicating a fall of 3.4% from the figure reported in the year-ago quarter. The consensus estimate for quarterly earnings, which has remained unchanged at $1.72 per share in the past 30 days, indicates a decrease of 37.7% from the year-ago quarter’s figure.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.The company has a trailing four-quarter earnings surprise of 38.3%, on average. In the last reported quarter, CRI’s bottom line beat the Zacks Consensus Estimate by 27.1%.Factors to Note Ahead of CRI’s ResultsCarter’s fourth-quarter performance is likely to have shown impacts of inflation, elevated interest rates and the suspension of pandemic-related stimulus payments to child-care centers, hence, resulting in bleak demand for its products. In addition, the company has been witnessing higher selling, general and administrative expenses (SG&A), as a percentage of sales, owing to fixed cost deleverage from lower sales, along with investments in brand marketing and retail stores, higher distribution expenses and rising transportation costs. The higher SG&A expense rate is expected to have strained operating margins and reduced profitability.In addition, the company has been witnessing a tough retail landscape and adverse effects of foreign currency translations. These factors, along with reduced online traffic, are expected to have particularly dented the its top-line performance during the quarter under review.On its last reported quarter’s earnings call, Carter’s had projected net sales in the range of $800-$840 million for the fourth quarter of 2024, indicating a decline from $858 million recorded in the year-ago quarter. It had envisioned adjusted earnings of $1.32-$1.72 per share, down from $2.76 reported in the prior-year quarter. Adjusted operating income was expected to be in the band of $70-$90 million, implying a decrease from $136 million recorded in the year-ago quarter. We expect an adjusted operating income of $83.1 million, down 38.9% year over year.In the U.S. Retail business, management had expected total sales to fall in the high-single digits to low-double digits for the fourth quarter. Sales in International are likely to decline in the mid to high-single digits for the impending quarter. For the U.S. Retail business, the company had expected a fall of 9-12% in comparable sales. Our model predicts a sales decline of 9.3% in the U.S. Retail and 5.5% in the International segment.On the flip side, Carter’s has been making efforts to maneuver such challenges. The company has been implementing measures like improved pricing and optimized inventory management, apart from strengthening its e-commerce capabilities. For the fourth quarter, the company had anticipated sales to grow mid-single digits to high-single digits year over year in its U.S. Wholesale channel compared with our estimate of a 9% rise.What the Zacks Model Unveils for CRIOur proven model doesn’t conclusively predict an earnings beat for Carter's this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.Carter's currently has an Earnings ESP of 0.00% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.Carter's, Inc. Price and EPS Surprise Carter's, Inc. price-eps-surprise | Carter's, Inc. QuoteCarter’s Valuation PictureFrom a valuation perspective, Carter’s offers an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 10.76x, which is below the five-year high of 21.14x and the Shoes and Retail Apparel industry’s average of 28.1x, the stock offers compelling value for investors seeking exposure to the sector.The recent market movements show that CRI’s shares have risen 0.5% in the past three months compared with the industry's 4% growth.Stocks With the Favorable CombinationHere are some companies that, according to our model, have the right combination of elements to beat on earnings this reporting cycle.Accel Entertainment ACEL currently has an Earnings ESP of +26.83% and a Zacks Rank of 1. ACEL is likely to register top-line growth when it reports fourth-quarter 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $308.9 million, indicating 4% growth from the figure in the year-ago quarter. The consensus estimate for ACEL’s earnings is pegged at 21 cents a share, indicating a 19.2% drop from the year-ago quarter’s actual. ACEL has a trailing four-quarter earnings surprise of 26.1%, on average.lululemon athletica LULU currently has an Earnings ESP of +0.24% and a Zacks Rank of 2. LULU is likely to register top-line growth when it reports fourth-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.6 billion, indicating 11.5% growth from the figure in the year-ago quarter.The consensus estimate for LULU’s earnings is pegged at $5.83 a share, implying a 10.2% increase from the year-earlier quarter. LULU has a trailing four-quarter earnings surprise of 6.7%, on average.Carnival CCL currently has an Earnings ESP of +70.81% and a Zacks Rank of 3. CCL is likely to register growth in its top and bottom lines when it reports first-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $5.8 billion, indicating a 6.3% decrease from the figure in the year-ago quarter. The consensus estimate for CCL’s earnings is pegged at two cents per share, implying a 114.3% surge from the year-ago quarter’s actual. CCL has a trailing four-quarter earnings surprise of 326.4%, on average.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Carnival Corporation (CCL): Free Stock Analysis Report lululemon athletica inc. (LULU): Free Stock Analysis Report Carter's, Inc. (CRI): Free Stock Analysis Report Accel Entertainment, Inc. (ACEL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks