Is Carter's (CRI) Stock Undervalued 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.

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 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.

One company to watch right now is Carter's (CRI). CRI is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 11.92 right now. For comparison, its industry sports an average P/E of 21.96. Over the past year, CRI's Forward P/E has been as high as 14.58 and as low as 7.27, with a median of 10.72.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CRI has a P/S ratio of 0.43. This compares to its industry's average P/S of 0.74.

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

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