The firm said the baby and children's apparel company can generate steady growth and boost margins.
"We see both gross margin and [selling, general, and administrative expenses] as sources of upside surprise as the company benefits from a set of discrete expense savings, exits a period of heavy SG&A spend and faces an improving product cost environment (i.e. cotton)," analysts at Goldman Sachs said.
The firm maintained its $102 price target for Carter's.
Shares of Carter's are up 0.24% to $79.97 in late afternoon trading Wednesday.
Separately, TheStreet Ratings team rates CARTER'S INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CARTER'S INC (CRI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, revenue growth, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CARTER'S INC has improved earnings per share by 45.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CARTER'S INC increased its bottom line by earning $2.77 versus $2.69 in the prior year. This year, the market expects an improvement in earnings ($3.90 versus $2.77).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Textiles, Apparel & Luxury Goods industry average. The net income increased by 31.6% when compared to the same quarter one year prior, rising from $19.67 million to $25.90 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 14.6%. Since the same quarter one year prior, revenues rose by 10.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 46.99% is the gross profit margin for CARTER'S INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 4.44% trails the industry average.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market on the basis of return on equity, CARTER'S INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full analysis from the report here: CRI Ratings Report