While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
Carter's (CRI) is a stock many investors are watching right now. CRI is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 11.92 right now. For comparison, its industry sports an average P/E of 17.78. Over the last 12 months, CRI's Forward P/E has been as high as 14.58 and as low as 7.27, with a median of 10.72.
Another valuation metric that we should highlight is CRI's P/B ratio of 1.33. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 3.59. Over the past year, 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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CRI has a P/S ratio of 0.41. This compares to its industry's average P/S of 0.86.
Finally, our model also underscores that CRI has a P/CF ratio of 4.97. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. CRI's current P/CF looks attractive when compared to its industry's average P/CF of 13.86. CRI's P/CF has been as high as 8.34 and as low as 3.76, with a median of 5.40, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Carter's is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CRI feels like a great value stock at the moment.
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Carter's, Inc. (CRI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).