October 31, 2024
Top 10 Stock Carter's Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Carter's – Top 10 Stock in SDG 4: Quality Education
Carter's is listed as a top 10 stock on October 31, 2024 in the market index SDG 4 because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 50 (high 50% performer), Obermatt assesses an overall buy recommendation for Carter's on October 31, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Apparel, Accessories, Luxury |
| Index | Dividends USA, SDG 12, SDG 13, SDG 4, SDG 5, SDG 8, S&P MIDCAP |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Carter's Buy
| 360 METRICS | October 31, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 75 |
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| GROWTH | ||||||||
| GROWTH | 1 |
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| SAFETY | ||||||||
| SAFETY | 74 |
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| SENTIMENT | ||||||||
| SENTIMENT | 50 |
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| 360° VIEW | ||||||||
| 360° VIEW | 50 |
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ANALYSIS: With an Obermatt 360° View of 50 (better than 50% compared with alternatives), overall professional sentiment and financial characteristics for the stock Carter's are above average. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for Carter's. The consolidated Value Rank has an attractive rank of 75, which means that the share price of Carter's is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 75% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 74. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 50. But the consolidated Growth Rank has a low rank of 1, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 99 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 50, Carter's is better positioned than 50% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 75), secure financing practices (Safety Rank of 74), and positive market sentiment in the professional investor community (Sentiment Rank of 50). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 1), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of Carter's is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Carter's positive
ANALYSIS: With an Obermatt Sentiment Rank of 50 (better than 50% compared with alternatives), overall professional sentiment and engagement for the stock Carter's is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and above average for Carter's. Analyst Opinions are at a rank of 1 (worse than 99% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 79 which means that stock research experts are changing their opinions for the better. In other words, they are getting more optimistic of stock investments in Carter's. Market Pulse is also positive with a rank of 72, which means that the current professional news and professional social networks are positive in their discussions about this company (more positive news than for 72% of competitors). Only professional investors tend to be absent with a Professional Investors rank of 42, which means that professional investors hold less stock in this company than in 58% of alternative investment opportunities. Pros tend to invest in other companies. But that could also be due to the size of the company. Professional investors tend to invest in XL and XXL companies. If the company is smaller than that, that fact alone may explain why there are fewer pros present. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 50 (more positive than 50% compared with investment alternatives), Carter's has a reputation among professional investors that is above-average compared with that of its competitors. Since analysts are getting more optimistic and the professional communication channels are positive, it may be an indication of a company that has the difficult times behind it or the stocks’ value is improving. For medium to smaller companies, the positive sentiment indicators outshine the negative. ...read more
Value Strategy: Carter's Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 75 (better than 75% compared with alternatives) for 2024, Carter's shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Carter's. Price-to-Sales (P/S) is 52, which means that the stock price compared with what market professionals expect for future sales is lower than for 52% of comparable companies, indicating a good value concerning Carter's's revenue size. The same is valid for expected Price-to-Profits (or Price / Earnings, P/E), more favorable than for 64% of alternatives. It is also positive for expected dividend yields with a Dividend Yield rank of 97 (dividends are expected to be higher than 97% of other stocks). But, compared with other companies in the same industry, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is higher than average, making the stock more expensive. Only 54% of all competitors have an even higher price compared with book capital which puts the Price-to-Capital Rank for Carter's to 46. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 75, is a buy recommendation based on Carter's's stock price compared with the company's operational size and dividend yields. A low level of book capital means that the company has a business that is leaner in assets than its competitors. For instance, the company could be leasing its production facilities or be more focussed on intellectual property, such as its brand and software, which is less visible in its book capital. If that is the case, the three good value ranks for Sales, Profits, and Dividends are reliable indicators for the stock price value. ...read more
Growth Strategy: Carter's Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 1 (better than 1% compared with alternatives), Carter's shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with all four metrics below average for Carter's. Sales Growth has a rank of 8, which means that currently professionals expect the company to grow less than 92% of its competitors. The same is valid for Profit Growth, with a rank of 30, and Capital Growth with 4. In addition, Stock Returns have a below market rank of 23, which means that the stock returns have recently been below 77% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 1, is a sell recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's outlook, especially Sentiment performance, because it may be a turnaround situation that could entail above-average stock returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: Carter's Debt Financing Safety above-average
| SAFETY METRICS | October 31, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 40 |
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| REFINANCING | ||||||||
| REFINANCING | 61 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 68 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 74 |
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ANALYSIS: With an Obermatt Safety Rank of 74 (better than 74% compared with alternatives), the company Carter's has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Carter's is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for Carter's. Refinancing is at 61, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 61% of its competitors. Liquidity is also good at 68, meaning the company generates more profit to service its debt than 68% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 40, which means the company has an above-average debt-to-equity ratio. It has more debt than 60% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 74 (better than 74% compared with alternatives), Carter's has a financing structure that is safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Carter's could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Carter's Above-Average Financial Performance
| COMBINED PERFORMANCE | October 31, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 75 |
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| GROWTH | ||||||||
| GROWTH | 1 |
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| SAFETY | ||||||||
| SAFETY | 68 |
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| COMBINED | ||||||||
| COMBINED | 55 |
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ANALYSIS: With an Obermatt Combined Rank of 55 (better than 55% compared with investment alternatives), Carter's (Apparel, Accessories, Luxury, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Carter's are a good value (attractively priced) with a consolidated Value Rank of 75 (better than 75% of alternatives), are safely financed (Safety Rank of 74, which means low debt burdens), but show below-average growth (Growth Rank of 1). ...read more
RECOMMENDATION: A Combined Rank of 55, is a buy recommendation based on Carter's's financial characteristics. As the company Carter's's key financial metrics exhibit good value (Obermatt Value Rank of 75) but low growth (Obermatt Growth Rank of 1) while being safely financed (Obermatt Safety Rank of 74), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 75% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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