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The Zacks Analyst Blog Highlights: Guess', Hasbro, Live Nation Entertainment, Skechers U.S.A. and Under Armour

Zacks Equity Research

For Immediate Release

Chicago, IL – July 30, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Guess', Inc. GES, Hasbro, Inc. HAS, Live Nation Entertainment, Inc. LYV, Skechers U.S.A., Inc. SKX and Under Armour, Inc. UAA.

Here are highlights from Monday’s Analyst Blog:

Strong Consumer Spending Powers GDP Growth: 5 Winners

The U.S. economy slowed down but maintained a steady pace of growth in the second quarter. Consumer spending surged and helped the economy gain traction, making up for a decline in business investment amid trade uncertainties and cooling global activities.

This calls for investing in consumer discretionary companies that are poised to grow on signs of consumer spending strength.

Better-Than-Expected Q2 GDP Growth

Economic growth in the United States has once again exceeded estimates in the second quarter. According to the Bureau of Economic Analysis (BEA), the real or in other words inflation-adjusted GDP expanded at an annualized rate of 2.1%, which surpassed expectations of a 1.9% reading. But, economic growth slowed down from a 3.1% gain in the first three months of the year. And it was mostly because of weakness in business investment.

Exporters and manufacturers took a beating in the said quarter, mostly due to a deteriorating global economy and trade dispute between the United States and China. Gross private domestic investment dropped 5.5%, which includes a whopping 10.6% fall in investment in structures. Nonetheless, GDP was able to exceed consensus expectations, predominantly because of robust consumer spending.

Economy Gets a Boost From Solid Consumer Spending

Consumer spending, which accounts for more than two-third of economic output, grew at an annualized rate of 4.3% in the second quarter, adjusted for inflation, and blew past expectations. In fact, consumer outlay in the said quarter registered the fastest growth rate since fourth-quarter 2017 and also the fifth fastest since first-quarter 2006. This is indeed a solid comeback, since consumer outlays were pretty soft in the fourth quarter of last year and first quarter this year.

Adjusted for inflation, consumer spending on durable goods rose at an annualized rate of 12.9%, and for non-durable goods, it climbed 6%. As a result, spending for all goods combined came in at 8.3%. For services, by the way, spending rose 2.5%.

What Drove Consumer Spending?

Buoyed by job additions, the lowest unemployment rate in almost 50 years and steady rise in income, Americans are on a spending spree.

The United States added a heartening 224,000 jobs last month, way higher than analysts’ expectations of 170,000 jobs, per the Labor Department. Such stellar job additions calmed nerves about the health of the economy, which has now entered its 11th year of expansion. It’s worth pointing out that May’s job additions of 72,000 raised doubts about the current state of the economy.

Nonetheless, hiring last month was widespread, defying disputes between the United States and its trading partners as well as slowdown in global economic growth that affected American exports and dented businesses and consumer confidence.

Professional and business services added 51,000 new jobs, while health care saw another 35,000 job addition. Transportation and warehousing added 24,000 jobs. Meanwhile, construction added 21,000 and manufacturing saw another 17,000 jobs added, way higher than its 2019 monthly average of 8,000.

Unemployment rate, by the way, edged up to 3.7% from 3.6% but is still near a 50-year low. The U-6 rate ticked up to 7.2%. However, the rate of underemployment is below where it was a few years back. What’s more, the phenomenal jobs report shows that hourly pay has gone up by 6 cents to $27.90 an hour. In the last 12 months, wage gains held steady at 3.1%.

Consumer Spending Continues to Drive Output: 5 Winners

Courtesy of a rise in household spending, consumer discretionary companies are poised to benefit the most as outlays play a major role in determining their revenues. We have, thus, selected five consumer discretionary stocks that flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Guess', Inc. designs, markets, distributes, and licenses lifestyle collections of apparel and accessories for men, women, and children. The Zacks Consensus Estimate for its current-year earnings has increased 6.8% over the past 60 days. The company’s expected earnings growth for the current year is 28.6%, more than the Textile - Apparel industry’s projected rally of 4%. The company has outperformed the broader industry in the past month (+4.6% vs +2.3%).

Hasbro, Inc.operates as a play and entertainment company. The Zacks Consensus Estimate for its current-year earnings has moved up 3.1% over the past 60 days. The company’s expected earnings growth for the current year is 21%, more than the Toys - Games - Hobbies industry’s estimated rally of 7.9%. The company has outperformed the broader industry in the past month (+16.2% vs +0.9%).

Live Nation Entertainment, Inc.operates as a live entertainment company. The Zacks Consensus Estimate for its current-year earnings has increased 3.7% over the past 60 days. The company’s expected earnings growth for the current quarter is 21.4%, higher than the Leisure and Recreation Services industry’s expected rise of 1.2%. The company has outperformed the broader industry in the past month (+9.5% vs +1.9%).

Skechers U.S.A., Inc.designs, develops, markets, and distributes footwear for men, women, and children; and performance footwear for men and women. The Zacks Consensus Estimate for its current-year earnings has risen 9.4% over the past 60 days. The company’s expected earnings growth for the current year is 15.1%, more than the Shoes and Retail Apparel  industry’s expected climb of 5.8%. The company has outperformed the broader industry in the last one-month period (+21.5% vs +2.6%).

Under Armour, Inc. develops, markets, and distributes branded performance apparel, footwear, and accessories for men, women, and youth. The Zacks Consensus Estimate for its current-year earnings has increased 2.9% over the past 90 days. The company’s expected earnings growth for the current year is 29.6%, more than the Textile - Apparel industry’s projected rally of 4%. The company has outperformed the broader industry in the past month (+8.3% vs +2.3%).

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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