Carter's Earnings Preview

Carter's (NYSE: CRI  ) will try to beat its earnings estimates for the third consecutive quarter. The company will unveil its latest earnings on Monday. Carter's is a branded marketer in the United States of apparel exclusively for babies and young children.

What analysts say

• Buy, sell, or hold?: Analysts think investors should stand pat on Carter's with seven of eight analysts rating it hold. Analysts don't like Carter's as much as competitor Children's Place Retail Stores overall. Seven out of 11 analysts rate Children's Place Retail Stores a buy compared to zero of eight for Carter's.
• Revenue forecasts: On average, analysts predict $384.3 million in revenue this quarter. That would represent a rise of 17.5% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $0.13 per share. Estimates range from $0.11 to $0.15.

What our community says
CAPS All-Stars are solidly backing the stock with 97.4% assigning it an outperform rating. The community at large agrees with the All Stars with 98% giving it a rating of outperform. Fools are bullish on Carter's and haven't been shy with their opinions lately, logging 112 posts in the past 30 days. Even with a robust four out of five stars, Carter's CAPS rating falls a little short of the community's upbeat outlook.

Management:
Carter's profit has risen year over year by an average of 12.5%. Revenue has now gone up for three straight quarters. The company's gross margin shrank by 7.1 percentage points in the last quarter. Revenue rose 14.7% while cost of sales rose 28.5% to $311.2 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter	Q1	Q4	Q3	Q2
Gross Margin	33.6%	29.6%	37.2%	39.8%
Operating Margin	11.4%	11.9%	15.4%	10.2%
Net Margin	6.8%	7.0%	9.6%	5.8%

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