|
Related Topics
|
Category: Stock Market and Carter's Inc.
Date: 25 October 2019 Stock Price: $100.43 We take a look at the 3rd quarter earnings report of their 2019 fiscal year of Carter's Inc. the largest branded marketer in North America of apparel and related products for babies and young children.
|
About Carter's Inc.
Carter’s, Inc. is the largest branded marketer in North America of apparel and related products exclusively for babies and young children. The Company owns the Carter's and OshKosh B'gosh brands, two of the most recognized brands in the marketplace. These brands are sold in leading department stores, national chains, and specialty retailers domestically and internationally. They are also sold through more than 1,000 Company-operated stores in the United States, Canada, and Mexico and on-line at www.carters.com, www.oshkosh.com, and www.cartersoshkosh.ca. The Company's Child of Mine brand is available at Walmart, its Just One You brand is available at Target, and its Simple Joys brand is available on Amazon. The Company also owns Skip Hop, a global lifestyle brand for families with young children. Carter's is headquartered in Atlanta, Georgia.
Overview of Carter's Inc.'s latest earnings report
Data below refers to quarterly data unless specified otherwise:
- Net sales: $943.322 million (up from $923.907 million for the same period of the previous year)
- Net sales increased by 2.1% over the last 12 months
- Cost of goods sold: $541.111 million (up from $536.457 million for the same period of the previous year)
- Cost of goods sold increased by 0.8% over the last 12 months
- Net income: 60.252 million (down from $71.770 million for the same period of the previous year)
- Diluted earnings per share: $1.34 (up from $1.53 for the same period of the previous year)
- PE ratio of Carter's Inc.: 18.7
- Dividend declared for the quarter: $0.50
- Dividend yield of Carter's Inc: 2%
- Diluted weighted-average shares outstanding: 44.432 million (down from 46.480 million for the same period of the previous year)
- Cash and cash equivalents: $153.946 million
- Cash and cash equivalents per share: $3.46
- Cash and cash equivalents makes up 3.44% of Carters' market capital
- Cash and cash equivalents makes up 5.3% of Carters' total assets
- Accounts receivable: $293.203 million
- Accounts receivable makes up 10.11% of Carters' total assets
- Goodwill of Carter's: $228.235 million
- Goodwill per share: $5.13
- Goodwill makes up 8.87% of Carters' total assets
- Stockholders equity in Carter's Inc.: $812.734 million
- Stockholders equity per share in Carter's: $18.29
- So Carter's Inc. is trading at 5.47 times its stockholders equity per share which is outside the expected range of between 2 and 4 most firms tend to trade at
- Cash generated from operations (for the 9 months): $73.355 million
- Cash generated from operations per share (for the 9 months): $1.65
Carter's Inc.'s management commentary on the results
ATLANTA--(BUSINESS WIRE)--Oct. 24, 2019-- Carter’s, Inc. (NYSE:CRI), the largest branded marketer in North America of apparel exclusively for babies and young children, today reported its third quarter fiscal 2019 results.
“Our third quarter results include a non-cash charge to recognize the impairment of our Skip Hop tradename,” said Michael D. Casey, Chairman and Chief Executive Officer. “Since its acquisition in 2017, Skip Hop has achieved good growth in sales, but the carrying value of its tradename has been impaired by the loss of its largest customer, Toys “R” Us, which closed last year, lower international demand, and higher product costs driven by tariffs imposed on China imports this year. Excluding the impairment charge, we exceeded our sales and earnings growth objectives in the third quarter. Our growth was driven by our wholesale and retail businesses, and reflects good demand for our fall and holiday product offerings. With fall-like weather arriving in more parts of the United States, we believe we are on track to achieve our 31st consecutive year of sales growth.”
Return of Capital
In the third quarter and first three quarters of fiscal 2019, the Company returned to shareholders a total of $77.3 million and $215.0 million, respectively, through share repurchases and cash dividends as described below. During the third quarter of fiscal 2019, the Company repurchased and retired 602,043 shares of its common stock for $55.0 million at an average price of $91.39 per share. In the first three quarters of fiscal 2019, the Company repurchased and retired 1,607,920 shares of its common stock for $147.5 million at an average price of $91.71 per share. Fiscal year-to-date through October 23, 2019, the Company has repurchased and retired a total of 1,773,753 shares for $162.8 million at an average price of $91.76 per share. All shares were repurchased in open market transactions pursuant to applicable regulations for such transactions. As of October 23, 2019, the total remaining capacity under the Company’s previously announced repurchase authorizations was approximately $230 million.
In the third quarter of fiscal 2019, the Company paid a cash dividend of $0.50 per share totaling $22.3 million. In the first three quarters of fiscal 2019, the Company paid cash dividends of $0.50 per share each quarter totaling $67.5 million. Future declarations of quarterly dividends and the establishment of related record and payment dates will be at the discretion of the Company’s Board of Directors based on a number of factors, including the Company’s future financial performance and other considerations.
2019 Business Outlook
For the fourth quarter of fiscal 2019, the Company projects net sales will increase approximately 1% compared to the fourth quarter of fiscal 2018 and adjusted diluted earnings per share will increase approximately 1% compared to adjusted diluted earnings per share of $2.84 in the fourth quarter of fiscal 2018. For fiscal 2019, the Company now projects net sales will increase approximately 1.5% (within the previously projected growth range of approximately 1% to 2%) compared to fiscal 2018 and adjusted diluted earnings per share will increase approximately 4% (previously projected growth range of approximately 4% to 6%) compared to adjusted diluted earnings per share of $6.29 in fiscal 2018. This fiscal 2019 adjusted earnings forecast excludes the following pre-tax items: 1) impairment charge of $30.8 million related to the write-down of the Skip Hop tradename asset; 2) charges totaling $7.8 million related to early extinguishment of debt; 3) expenses of $1.6 million related to organizational restructuring; 4) a benefit of $2.1 million related to a favorable recovery in value of China-related inventories, and 5) a $0.7 million reversal of store restructuring costs previously recorded during the third quarter of fiscal 2017.
“Our third quarter results include a non-cash charge to recognize the impairment of our Skip Hop tradename,” said Michael D. Casey, Chairman and Chief Executive Officer. “Since its acquisition in 2017, Skip Hop has achieved good growth in sales, but the carrying value of its tradename has been impaired by the loss of its largest customer, Toys “R” Us, which closed last year, lower international demand, and higher product costs driven by tariffs imposed on China imports this year. Excluding the impairment charge, we exceeded our sales and earnings growth objectives in the third quarter. Our growth was driven by our wholesale and retail businesses, and reflects good demand for our fall and holiday product offerings. With fall-like weather arriving in more parts of the United States, we believe we are on track to achieve our 31st consecutive year of sales growth.”
Return of Capital
In the third quarter and first three quarters of fiscal 2019, the Company returned to shareholders a total of $77.3 million and $215.0 million, respectively, through share repurchases and cash dividends as described below. During the third quarter of fiscal 2019, the Company repurchased and retired 602,043 shares of its common stock for $55.0 million at an average price of $91.39 per share. In the first three quarters of fiscal 2019, the Company repurchased and retired 1,607,920 shares of its common stock for $147.5 million at an average price of $91.71 per share. Fiscal year-to-date through October 23, 2019, the Company has repurchased and retired a total of 1,773,753 shares for $162.8 million at an average price of $91.76 per share. All shares were repurchased in open market transactions pursuant to applicable regulations for such transactions. As of October 23, 2019, the total remaining capacity under the Company’s previously announced repurchase authorizations was approximately $230 million.
In the third quarter of fiscal 2019, the Company paid a cash dividend of $0.50 per share totaling $22.3 million. In the first three quarters of fiscal 2019, the Company paid cash dividends of $0.50 per share each quarter totaling $67.5 million. Future declarations of quarterly dividends and the establishment of related record and payment dates will be at the discretion of the Company’s Board of Directors based on a number of factors, including the Company’s future financial performance and other considerations.
2019 Business Outlook
For the fourth quarter of fiscal 2019, the Company projects net sales will increase approximately 1% compared to the fourth quarter of fiscal 2018 and adjusted diluted earnings per share will increase approximately 1% compared to adjusted diluted earnings per share of $2.84 in the fourth quarter of fiscal 2018. For fiscal 2019, the Company now projects net sales will increase approximately 1.5% (within the previously projected growth range of approximately 1% to 2%) compared to fiscal 2018 and adjusted diluted earnings per share will increase approximately 4% (previously projected growth range of approximately 4% to 6%) compared to adjusted diluted earnings per share of $6.29 in fiscal 2018. This fiscal 2019 adjusted earnings forecast excludes the following pre-tax items: 1) impairment charge of $30.8 million related to the write-down of the Skip Hop tradename asset; 2) charges totaling $7.8 million related to early extinguishment of debt; 3) expenses of $1.6 million related to organizational restructuring; 4) a benefit of $2.1 million related to a favorable recovery in value of China-related inventories, and 5) a $0.7 million reversal of store restructuring costs previously recorded during the third quarter of fiscal 2017.
Carter's Inc. (NYSE: CRI) stock price history
The image below, obtained from Google, shows the stock price history of Carter's Inc. over the last 5 years. And it's been a very volatile but overall positive time for Carter's Inc. stockholders. 5 years ago the stock was trading at around $78.20 a stock and its currently trading at $100.43 a stock. That's a very modest return of 28.4% returned to Carter's Inc. stockholders over the last 5 years. While the return of 28.4% is not to bad, the opportunity cost of holding Carter's Inc. stock instead of say Netflix that returned over 300% over a 5 year period becomes significant.
The stock of Carter's Inc. is trading at a little closer to its 52 week high of $109.71 than it is to its 52 week low of $75.66 which to us is a indication that the short term momentum and sentiment of Carter's Inc. stock is relatively positive at this point in time.
The stock of Carter's Inc. is trading at a little closer to its 52 week high of $109.71 than it is to its 52 week low of $75.66 which to us is a indication that the short term momentum and sentiment of Carter's Inc. stock is relatively positive at this point in time.
Recent coverage of Carter's Inc.
The extract below discusses why Carter's Inc. could potentially beat earnings estimates again as obtained from Zacks.com
Carter’s Inc. (CRI - Free Report) reported third-quarter 2019 results, wherein top and bottom lines surpassed the Zacks Consensus Estimate and improved year over year. Results gained from strong retail and wholesale businesses along with robust demand for its fall and holiday season merchandise. Further, management updated view for 2019. We note that shares of this company have gained 19.3% year to date, underperforming the industry’s 27.9% growth.
Read the full article here
Carter’s Inc. (CRI - Free Report) reported third-quarter 2019 results, wherein top and bottom lines surpassed the Zacks Consensus Estimate and improved year over year. Results gained from strong retail and wholesale businesses along with robust demand for its fall and holiday season merchandise. Further, management updated view for 2019. We note that shares of this company have gained 19.3% year to date, underperforming the industry’s 27.9% growth.
Read the full article here
Carter's Inc. (NYSE: CRI) latest stock valuation
So what is Carter's Inc. stock worth based on the release of their latest earnings report and their outlook for the rest of their 2019 fiscal year? Based on Carter's Inc. latest earnings report and their outlook our valuation models provide a target (full value) price for Carter's Inc. stock at $104.70 a stock (up slightly from our 2nd quarter 2019 earnings valuation of Carter's). We therefore believe that the stock of Carter's Inc. is undervalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $104.70 Therefore we believe a good entry point into Carter's Inc. stock is at $94.30 or below. We expect the stock price of Carter's Inc. to tick upwards slightly to levels closer to our target (full value) price in coming weeks and months.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $104.70 Therefore we believe a good entry point into Carter's Inc. stock is at $94.30 or below. We expect the stock price of Carter's Inc. to tick upwards slightly to levels closer to our target (full value) price in coming weeks and months.
Next earnings release date for Carter's Inc.
It is expected that Carter's Inc. (NYSE: CRI) 4th quarter and full fiscal 2019 earnings report will be released in late January 2020.