What Happened?

Shares of children’s apparel manufacturer Carter’s (NYSE:CRI) fell 7.6% in the morning session after the company reported weak third-quarter earnings results, with its EPS forecast for the next quarter missing Wall Street's estimates. Revenue was also underwhelming as it came in roughly in line with expectations. Management attributed the softness to inflation and interest rates, which "weighed on families with young children and demand for our brands." Overall, the outlook seems to be weighing on shares.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Carter's? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Carter’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 3 months ago when the stock dropped 11.3% on the news that the company reported second quarter earnings results. Its full-year revenue guidance was lowered, and it now sits below expectations. Also, its full-year earnings guidance fell short of Wall Street's estimates, so the outlook was worrisome for the retailer. Management highlighted a host of challenges. Firstly, CRI called out weaker market conditions due to declining consumer confidence and inflation, which hasn't moderated to expected levels. In addition, the company noted that "The quarter got off to a slow start in April with the earlier Easter holiday and late arrival of warmer weather." Overall, this was a bad quarter.

Carter's is down 20.4% since the beginning of the year, and at $59.99 per share, it is trading 31.8% below its 52-week high of $87.92 from March 2024. Investors who bought $1,000 worth of Carter’s shares 5 years ago would now be looking at an investment worth $599.91.

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