Carter's (CRI) AI Stock Analysis

• Market Cap: $1.13B
• Dividend Yield: 4.88%
• Average Volume (3M): 1.05M
• Price to Earnings (P/E): 12.6
• Beta (1Y): 0.79
• Revenue Growth: -0.34%
• EPS Growth: -61.00%
• Country: US
• Employees: 15,350
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Apparel - Retail
• EPS (TTM): 0.74
• Shares Outstanding: 36,447,870
• 10 Day Avg. Volume: 873,228
• 30 Day Avg. Volume: 1,051,468
• PEG Ratio: -0.58
• Price to Book (P/B): 2.26
• Price to Sales (P/S): 0.68
• P/FCF Ratio: 7.97
• Enterprise Value/Market Cap: 1.79
• Enterprise Value/Revenue: 0.72
• Enterprise Value/Gross Profit: 1.53
• Enterprise Value/Ebitda: 10.17
• 1Y Price Target: $28.80
• Price Target Upside: -9.29% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 5
• EPS Forecast (FY): 2.96
• Revenue Forecast (FY): $2.85B

• Rating: 68 Neutral
• Price Target: $34.00 ▲(7.09% Upside)

Carter's overall stock score reflects a company facing significant operational challenges, particularly in revenue and profitability declines. While the valuation is attractive and recent corporate events provide some positive outlook, the financial performance and earnings call highlight ongoing risks. Investors should weigh these factors carefully, considering the company's strategic initiatives to improve future performance.

Positive Factors

Financial Flexibility

The new credit facility enhances Carter's financial flexibility, supporting operational needs and strategic initiatives, which is crucial for long-term stability and growth.

Cost Savings Initiatives

Carter's focus on cost savings and efficiency measures, including reducing office-based roles, is expected to improve profitability and operational efficiency over the long term.

Revenue Channels

Growth in U.S. Retail and International segments indicates strong market presence and potential for sustained revenue expansion, supporting long-term business health.

Negative Factors

Revenue Decline

Negative revenue growth reflects challenges in sales expansion, which could impact long-term financial performance and market competitiveness if not addressed.

Gross Margin Pressure

Decreased gross margins due to tariffs and product costs suggest ongoing profitability challenges, potentially affecting long-term financial health.

Leadership Changes

The resignation of the CTO could disrupt technological initiatives and strategic direction, impacting long-term innovation and competitive positioning.

Carter's Business Overview & Revenue Model

Company Description

Carter's, Inc., together with its subsidiaries, designs, sources, and markets branded childrenswear under the Carter's, OshKosh, Skip Hop, Child of Mine, Just One You, Simple Joys, Carter's My First Love, little planet, and other brands in the United States and internationally. The company operates through three segments: U.S. Retail, U.S. Wholesale, and International. Its Carter's products include babies and young children products, such as bodysuits, pants, dresses, knit sets, blankets, layette essentials, bibs, booties, sleep and play products, rompers, and jumpers; and OshKosh brand products comprise playclothes, such as denim apparel products with multiple wash treatments and coordinating garments, overalls, woven bottoms, knit tops, and bodysuits. The company also provides products for playtime, travel, mealtime, bathtime, and homegear, as well as kid's bags and diaper bags under the Skip Hop brand. In addition, it offers bedding, cribs, diaper bags, footwear, gift sets, hair accessories, jewelry, outerwear, paper goods, socks, shoes, swimwear, and toys. The company operates 18,800 wholesale locations, including department stores, national chain stores, and specialty stores. As of December 31, 2021, it operated 980 retail stores. The company also sells its products through its eCommerce websites, such as carters.com, oshkoshbgosh.com, oshkosh.com, and skiphop.com, as well as other international wholesale accounts and licensees. Carter's, Inc. was founded in 1865 and is headquartered in Atlanta, Georgia.

How the Company Makes Money

Carter's generates revenue through multiple streams, primarily from the sale of its branded apparel and accessories. The bulk of its sales comes from direct-to-consumer channels, including its brick-and-mortar stores and online platforms, which allow the company to reach a broad customer base. Additionally, Carter's benefits from partnerships with major retail chains and department stores that carry its products, enhancing distribution and visibility. The company also engages in seasonal promotions and marketing campaigns to drive sales, and its focus on product quality and brand loyalty contributes to repeat purchases, further solidifying its revenue. Overall, Carter's diversified sales channels and strong brand recognition play a significant role in its financial success.

Carter's Financial Statement Overview

Summary

Carter's financial performance shows challenges in revenue growth and profitability, with high leverage posing potential risks. Operational efficiency is evident, but the decline in cash flow growth and high debt levels are concerning.

Income Statement

Carter's shows a mixed performance in its income statement. The TTM data indicates a slight decline in revenue and profit margins compared to previous years. The gross profit margin remains stable, but the net profit margin has decreased, reflecting challenges in maintaining profitability. Revenue growth has been negative, indicating potential market challenges or competitive pressures. However, the company maintains a reasonable EBIT and EBITDA margin, suggesting operational efficiency.

Balance Sheet

The balance sheet reveals a moderate financial position with a high debt-to-equity ratio, indicating significant leverage. However, the return on equity remains healthy, suggesting effective use of equity to generate profits. The equity ratio is stable, reflecting a balanced asset structure. The company should focus on managing its debt levels to reduce financial risk.

Cash Flow

Carter's cash flow statement shows a decline in free cash flow growth, which is a concern for future liquidity. The operating cash flow to net income ratio is below 1, indicating potential challenges in converting income into cash. However, the free cash flow to net income ratio remains strong, suggesting that the company is still generating sufficient cash relative to its net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.83B	2.84B	2.95B	3.21B	3.49B	3.02B
Gross Profit	1.33B	1.37B	1.40B	1.47B	1.66B	1.31B
EBITDA	199.55M	343.49M	400.35M	424.79M	592.69M	328.90M
Net Income	89.09M	185.51M	232.50M	250.04M	339.75M	109.72M
Balance Sheet
Total Assets	2.47B	2.43B	2.38B	2.44B	3.19B	3.39B
Cash, Cash Equivalents and Short-Term Investments	184.19M	412.93M	351.21M	211.75M	984.29M	1.10B
Total Debt	1.18B	1.13B	1.08B	1.18B	1.57B	1.73B
Total Liabilities	1.60B	1.58B	1.53B	1.64B	2.24B	2.45B
Stockholders Equity	864.64M	854.56M	845.25M	796.41M	950.19M	938.03M
Cash Flow
Free Cash Flow	91.97M	242.62M	469.27M	48.00M	230.82M	555.62M
Operating Cash Flow	151.16M	298.79M	529.13M	88.36M	268.26M	588.49M
Investing Cash Flow	-59.19M	-56.16M	-59.86M	-40.36M	-32.44M	-31.47M
Financing Cash Flow	-81.85M	-174.82M	-332.64M	-819.27M	-352.71M	324.84M

Carter's Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 31.75
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CRI, the sentiment is Positive. The current price of 31.75 is above the 20-day moving average (MA) of 31.19, above the 50-day MA of 30.77, and below the 200-day MA of 31.81, indicating a bullish trend. The MACD of 0.39 indicates Negative momentum. The RSI at 60.21 is Neutral, neither overbought nor oversold. The STOCH value of 54.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CRI.

Carter's Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GES	72 Outperform	$882.41M	16.16	16.57%	6.18%	6.44%	-9.23%
VSCO	71 Outperform	$4.07B	25.65	31.50%	―	2.97%	9.85%
CRI	68 Neutral	$1.13B	12.62	10.27%	4.88%	-0.34%	-61.00%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
SFIX	54 Neutral	$676.36M	―	-14.67%	―	-0.08%	73.05%
GCO	51 Neutral	$382.16M	―	-0.13%	―	2.76%	96.01%
PLCE	45 Neutral	$169.58M	―	―	―	-12.08%	93.16%

Carter's Corporate Events

Carter’s CTO Raghu Sagi Announces Resignation

On November 21, 2025, Raghu Sagi, the Chief Information & Technology Officer of Carter’s, Inc., announced his resignation, which will take effect on January 20, 2026. The company expressed its well wishes for Mr. Sagi’s future endeavors, indicating a significant change in its leadership structure.

Carter’s Secures New $750 Million Credit Facility

On November 17, 2025, The William Carter Company, a subsidiary of Carter’s, Inc., entered into a new five-year senior secured asset-based revolving credit facility of up to $750 million, replacing its existing facility. This new ABL Facility, which includes a $100 million sub-limit for letters of credit and a $50 million swing line sub-limit, is expected to enhance the company’s financial flexibility and support its operational needs, with a borrowing base estimated at approximately $799 million and availability of $743 million.

Carter’s Completes $575 Million Senior Notes Sale

On November 13, 2025, The William Carter Company, a subsidiary of Carter’s, Inc., completed the sale of $575 million in senior notes due 2031, receiving approximately $567 million after fees. The proceeds will be used to redeem existing 5.625% senior notes due 2027, cover related expenses, and for general corporate purposes. This financial maneuver is part of Carter’s strategy to manage its debt and improve its financial standing, potentially impacting its market position and stakeholder interests.

Carter’s Updates By-Laws to Streamline Governance

On November 13, 2025, Carter’s, Inc. announced amendments to its By-Laws, effective immediately, which include changes to the procedures for special meetings, proxy requirements, and director nominations. These changes aim to streamline governance and align with Delaware’s General Corporation Law. Additionally, the company declared a quarterly cash dividend of $0.25 per share, payable on December 5, 2025, reflecting its ongoing commitment to shareholder returns.

Carter’s Increases Senior Notes Offering to $575M

On October 29, 2025, Carter’s, Inc. announced the pricing of a $575 million senior notes offering by its subsidiary, The William Carter Company, marking a $75 million increase from the initial proposal. The proceeds from this offering will be used to redeem existing notes due in 2027, cover related fees, and for general corporate purposes, potentially impacting the company’s financial strategy and market positioning.

Carter’s Announces $500M Senior Notes Offering

On October 28, 2025, Carter’s, Inc. announced the commencement of a senior notes offering by its subsidiary, The William Carter Company, aiming to raise $500 million to redeem its 5.625% Senior Notes due 2027. This financial maneuver is part of a broader strategy to restructure its debt, which includes entering a new $750 million asset-based revolving credit facility, replacing the existing one. These moves are expected to impact the company’s financial flexibility and market positioning, although they are subject to market conditions and other factors.

Carter’s Announces Organizational Restructuring Plan

On September 16, 2025, Carter’s, Inc. announced an organizational restructuring plan to optimize its cost structure and enhance future profitability, with expected charges of $10.1 million to $11.1 million, primarily related to severance and termination benefits. The plan includes closing low-margin retail stores and refining product choices, aiming to generate significant savings and improve the company’s financial performance, despite challenges such as elevated product costs and higher tariffs impacting profitability.

Carter’s Adopts Stockholder Rights Agreement Amid Acquisition

On September 22, 2025, Carter’s, Inc. announced the adoption of a stockholder rights agreement to prevent any entity from gaining control of the company through open market accumulation without paying a control premium. This decision was made following the rapid acquisition of 16.86% of the company’s common stock by RWWM, Inc., which was disclosed on September 4, 2025. The agreement, effective from October 3, 2025, aims to protect the interests of all stockholders and ensure the board can make informed decisions. The rights agreement will expire on September 21, 2026, unless terminated earlier under specific conditions.