Are Investors Undervaluing Carter's (CRI) Right Now?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Carter's (CRI) is a stock many investors are watching right now. CRI is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 11.92, while its industry has an average P/E of 19.21. Over the past 52 weeks, CRI's Forward P/E has been as high as 14.58 and as low as 7.27, with a median of 10.72.

Investors should also recognize that CRI has a P/B ratio of 1.33. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.82. Within the past 52 weeks, CRI's P/B has been as high as 3.16 and as low as 1.01, with a median of 1.73.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CRI has a P/S ratio of 0.45. This compares to its industry's average P/S of 0.85.

Finally, investors will want to recognize that CRI has a P/CF ratio of 4.97. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. CRI's current P/CF looks attractive when compared to its industry's average P/CF of 14.82. Over the past year, CRI's P/CF has been as high as 8.34 and as low as 3.76, with a median of 5.40.

These are just a handful of the figures considered in Carter's's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CRI is an impressive value stock right now.

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This article originally published on Zacks Investment Research (zacks.com).

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