CARTER'S INC (NYSE:CRI) – A Dividend Stock Worth Considering

CARTER'S INC (NYSE:CRI) was identified by our dividend stock screener as a potential candidate for income-focused investors. The company, known for its children’s apparel brands, offers a strong dividend yield while maintaining solid financial health and profitability. Below, we examine why CRI stands out for dividend investors.

Dividend Strength

• High Dividend Yield: CRI currently offers an attractive yearly dividend yield of 8.45%, well above the industry average of 3.72% and the S&P 500 average of 2.39%.
• Consistent Dividend Growth: Over the past five years, the company has increased its dividend at an average annual rate of 16.75%, demonstrating a commitment to rewarding shareholders.
• Reliable Track Record: CRI has paid dividends for at least 10 years, with no reductions in the last three years, indicating stability in its payout policy.

Financial Health & Profitability

• Strong Solvency: With an Altman-Z score of 3.26, the company shows no immediate risk of financial distress. Its debt levels are manageable, supported by a healthy free cash flow position.
• Solid Liquidity: A current ratio of 2.56 and a quick ratio of 1.40 suggest CRI can comfortably meet short-term obligations.
• Decent Profitability: While margins have seen some pressure, CRI still outperforms many peers with a Return on Equity (ROE) of 23.26% and a Return on Invested Capital (ROIC) of 12.72%.

Valuation

CRI appears undervalued, trading at a Price/Earnings (P/E) ratio of 5.47, significantly below both industry and S&P 500 averages. The Enterprise Value to EBITDA ratio also suggests the stock is priced cheaply compared to peers.

Considerations

Despite its strengths, investors should note that earnings are expected to decline in the near term, which could impact future dividend growth. However, the current payout ratio of 58.78% remains sustainable if earnings stabilize.

For a deeper dive into CRI’s fundamentals, review the full fundamental report here.

Our Best Dividend Stocks screener provides more high-quality dividend stock ideas, updated daily.

Disclaimer

This is not investing advice. The observations here are based on available data at the time of writing. Always conduct your own research before making investment decisions.