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Consumer Sentiment Jumps in August: BAFM, DDI, RCL, TILE, CNK to Gain
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A spate of positive economic data released over the past couple of weeks has alleviated fears of a recession in the near term. Consumer sentiment, which was on the decline following concerns that the economy was slowing down due to high inflation, has also rebounded sharply in August.
The University of Michigan’s preliminary consumer sentiment index rose to 67.8 in August from the final reading of 66.4 in July. This was also above the consensus estimate of a reading of 66.9.
The survey’s outlook for inflation expectations over the next year remained unchanged at 2.9%. The sub-index tracking inflation expectations over the next five years remained at 3% for the fifth straight month.
With consumer sentiment brightening, these five consumer discretionary stocks have strong potential for 2024: Bright Horizons Family Solutions Inc. (BFAM - Free Report) , DoubleDown Interactive Co., Ltd. (DDI - Free Report) , Royal Caribbean Cruises Ltd. (RCL - Free Report) , Interface, Inc. (TILE - Free Report) and Cinemark Holdings, Inc. (CNK - Free Report) .
Consumer sentiment hit an eight-month low in July as inflation, despite declining sharply, continued to be above the Federal Reserve’s 2% target.
Moreover, a disappointing July jobs report and a surge in the unemployment rate reignited fears that the U.S. labor market was cooling rapidly and the Federal Reserve may have held interest rates higher for a longer period, which could now push the economy into a recession.
President Joe Biden’s decision to withdraw from the Presidential race also weighed on consumers’ sentiment.
However, a spate of economic data released over the past week showed jobless claims declining and inflation cooling further in July. This has bolstered hopes that the Federal Reserve will finally start its easing cycle in September.
The central bank hiked interest rates by 525 basis points to take its benchmark policy rate in the range of 5.25-5.5% to a 23-year high.
Higher interest rates have been taking a toll on the economy. However, inflation has been declining sharply and markets are now pricing in a 25-50 basis point rate cut in September, followed by another two rate cuts by the end of the year.
Lower interest rates will give consumers more purchasing power and bode well for the broader economy.
Bright Horizons Family Solutions Inc. is engaged in providing employer-sponsored child care, early education and work/life solutions. BFAM’s employer-sponsored child care programs include child care and early education centers, infant/toddler/preschool care and education, full and part-time child care, kindergarten, school-age programs, summer camps and backup care.
Bright Horizons Family Solutions’ expected earnings growth rate for the current year is 18.7%. The Zacks Consensus Estimate for current-year earnings has improved 7% over the past 60 days. BFAM presently carries a Zacks Rank #2.
Image Source: Zacks Investment Research
DoubleDown Interactive Co., Ltd. is a developer and publisher of digital social casino games. DDI is based in Seattle.
DoubleDown Interactive’s expected earnings growth rate for the current year is 15.8%. The Zacks Consensus Estimate for current-year earnings has improved 13.5% over the past 60 days. DDI currently sports a Zacks Rank #1.
Image Source: Zacks Investment Research
Royal Caribbean Cruises Ltd. owns and operates three global brands — Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. Additionally, RCL has a 50% investment in a joint venture with TUI AG, which operates the brand TUI Cruises. Royal Caribbean Cruises’ cruise brands primarily serve the contemporary, premium and deluxe segments of the cruise vacation industry, which also includes the budget and luxury segments.
Royal Caribbean Cruises’ expected earnings growth rate for the current year is 69.9%. The Zacks Consensus Estimate for current-year earnings has improved 3.7% over the past 60 days. RCL currently has a Zacks Rank #1.
Image Source: Zacks Investment Research
Interface, Inc. is the world's largest manufacturer of modular carpets, which it markets under the Interface and FLOR brands. TILE is committed to the goal of sustainability and doing business in ways that minimize the impact on the environment while enhancing shareholder value. Interface is the world's largest manufacturer of modular carpets.
Interface’s expected earnings growth rate for the current year is 28%. The Zacks Consensus Estimate for current-year earnings has improved 8.5% over the past 60 days. TILE presently sports a Zacks Rank #1.
Image Source: Zacks Investment Research
Cinemark Holdings, Inc. is a leader in the motion picture exhibition industry. CNK operates 408 theatres and 4,657 screens in 38 states in the United States and internationally in 12 countries, mainly in Mexico, South and Central America.
Cinemark Holdings’ expected earnings growth rate for the current year is 0.8%. The Zacks Consensus Estimate for current-year earnings has improved 22.7% over the past 60 days. CNK currently carries a Zacks Rank #2.
Image Source: Zacks Investment Research
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Consumer Sentiment Jumps in August: BAFM, DDI, RCL, TILE, CNK to Gain
A spate of positive economic data released over the past couple of weeks has alleviated fears of a recession in the near term. Consumer sentiment, which was on the decline following concerns that the economy was slowing down due to high inflation, has also rebounded sharply in August.
The University of Michigan’s preliminary consumer sentiment index rose to 67.8 in August from the final reading of 66.4 in July. This was also above the consensus estimate of a reading of 66.9.
The survey’s outlook for inflation expectations over the next year remained unchanged at 2.9%. The sub-index tracking inflation expectations over the next five years remained at 3% for the fifth straight month.
With consumer sentiment brightening, these five consumer discretionary stocks have strong potential for 2024: Bright Horizons Family Solutions Inc. (BFAM - Free Report) , DoubleDown Interactive Co., Ltd. (DDI - Free Report) , Royal Caribbean Cruises Ltd. (RCL - Free Report) , Interface, Inc. (TILE - Free Report) and Cinemark Holdings, Inc. (CNK - Free Report) .
Recession Fears Alleviate, Interest Rate Cuts Ahead
Consumer sentiment hit an eight-month low in July as inflation, despite declining sharply, continued to be above the Federal Reserve’s 2% target.
Moreover, a disappointing July jobs report and a surge in the unemployment rate reignited fears that the U.S. labor market was cooling rapidly and the Federal Reserve may have held interest rates higher for a longer period, which could now push the economy into a recession.
President Joe Biden’s decision to withdraw from the Presidential race also weighed on consumers’ sentiment.
However, a spate of economic data released over the past week showed jobless claims declining and inflation cooling further in July. This has bolstered hopes that the Federal Reserve will finally start its easing cycle in September.
The central bank hiked interest rates by 525 basis points to take its benchmark policy rate in the range of 5.25-5.5% to a 23-year high.
Higher interest rates have been taking a toll on the economy. However, inflation has been declining sharply and markets are now pricing in a 25-50 basis point rate cut in September, followed by another two rate cuts by the end of the year.
Lower interest rates will give consumers more purchasing power and bode well for the broader economy.
These Consumer Discretionary Stocks Rated Buy
These stocks have seen positive earnings estimate revisions in the last 60 days. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bright Horizons Family Solutions Inc. is engaged in providing employer-sponsored child care, early education and work/life solutions. BFAM’s employer-sponsored child care programs include child care and early education centers, infant/toddler/preschool care and education, full and part-time child care, kindergarten, school-age programs, summer camps and backup care.
Bright Horizons Family Solutions’ expected earnings growth rate for the current year is 18.7%. The Zacks Consensus Estimate for current-year earnings has improved 7% over the past 60 days. BFAM presently carries a Zacks Rank #2.
Image Source: Zacks Investment Research
DoubleDown Interactive Co., Ltd. is a developer and publisher of digital social casino games. DDI is based in Seattle.
DoubleDown Interactive’s expected earnings growth rate for the current year is 15.8%. The Zacks Consensus Estimate for current-year earnings has improved 13.5% over the past 60 days. DDI currently sports a Zacks Rank #1.
Image Source: Zacks Investment Research
Royal Caribbean Cruises Ltd. owns and operates three global brands — Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. Additionally, RCL has a 50% investment in a joint venture with TUI AG, which operates the brand TUI Cruises. Royal Caribbean Cruises’ cruise brands primarily serve the contemporary, premium and deluxe segments of the cruise vacation industry, which also includes the budget and luxury segments.
Royal Caribbean Cruises’ expected earnings growth rate for the current year is 69.9%. The Zacks Consensus Estimate for current-year earnings has improved 3.7% over the past 60 days. RCL currently has a Zacks Rank #1.
Image Source: Zacks Investment Research
Interface, Inc. is the world's largest manufacturer of modular carpets, which it markets under the Interface and FLOR brands. TILE is committed to the goal of sustainability and doing business in ways that minimize the impact on the environment while enhancing shareholder value. Interface is the world's largest manufacturer of modular carpets.
Interface’s expected earnings growth rate for the current year is 28%. The Zacks Consensus Estimate for current-year earnings has improved 8.5% over the past 60 days. TILE presently sports a Zacks Rank #1.
Image Source: Zacks Investment Research
Cinemark Holdings, Inc. is a leader in the motion picture exhibition industry. CNK operates 408 theatres and 4,657 screens in 38 states in the United States and internationally in 12 countries, mainly in Mexico, South and Central America.
Cinemark Holdings’ expected earnings growth rate for the current year is 0.8%. The Zacks Consensus Estimate for current-year earnings has improved 22.7% over the past 60 days. CNK currently carries a Zacks Rank #2.
Image Source: Zacks Investment Research