U.S. Consumer Confidence Index Jumps in May Amid Trade Optimism

On May 27, the Conference Board announced a rebound in the U.S. Consumer Confidence Index for May, rising to 98 after five months of decline. This figure exceeded the Zacks Consensus Estimate of 86, with April’s reading revised down slightly to 85.7.

Expectations of a U.S.-China trade deal and the Trump administration’s delay on imposing 50% tariffs on the European Union have bolstered consumer optimism. Ongoing negotiations on trade policies with various trading partners also contributed to this positive outlook.

Investment Outlook for Consumer Discretionary Stocks

Investors may find opportunities in consumer discretionary stocks. Five stocks with a favorable Zacks Rank include: Netflix Inc. (NFLX), The Walt Disney Co. (DIS), Charter Communications Inc. (CHTR), Roku Inc. (ROKU), and Roblox Corp. (RBLX), all carrying a Zacks Rank #2 (Buy).

Consumer Confidence Index Details

The Present Situation Index, measuring consumer sentiment on current business and labor conditions, climbed to 135.9 in May from 131.1 in April. The Expectations Index, gauging short-term expectations for income and job availability, rose to 72.8 from 55.4 but is still below the 80 threshold often associated with a recession.

In May, 44% of survey respondents anticipated higher stock prices over the next year, up from 37.6% in April. Additionally, 19.2% expected better job availability within six months, compared to 13.9% in April.

Stock Performances

The chart below displays the price performance of the selected stocks over the past month.

Image Source: Zacks Investment Research

Corporate Highlights

Netflix Inc.

In its first-quarter 2025 report, Netflix exceeded the Zacks Consensus Estimate for earnings while matching revenue expectations. Engagement levels remain strong despite economic uncertainties. The company reaffirmed its 2025 guidance.

Netflix launched its Ad Suite in the U.S. on April 1, with plans to expand internationally in Q2 2025. This ad-supported tier is anticipated to drive subscriber and average revenue per user (ARPU) growth.

To adapt to a potential recession, Netflix offers an ad-supported lower-priced tier and has implemented measures against password sharing while raising prices. The firm leverages artificial intelligence for tailored content recommendations, enhancing user experience.

Netflix expects revenue and earnings growth rates of 14% and 27.7%, respectively, for 2025. The Zacks Consensus Estimate for current-year earnings has risen by 3% over the past 60 days.

The Walt Disney Co.

The Walt Disney Company reported second-quarter fiscal 2025 results, showing year-over-year increases in revenue and earnings. Domestic Parks & Experiences boosted results, although international operations faced challenges.

Disney anticipates double-digit operating income growth in fiscal 2025, with ESPN achieving significant viewership increases. The company transformed its streaming sector, achieving a profitable Direct-to-Consumer (DTC) model with second-quarter DTC operating income at $336 million.

Projected revenue and earnings growth for Disney are 3.8% and 15.1%, respectively, for the current year (ending September 2025) with earnings estimates up by 4.6% in the last 30 days.

Charter Communications Inc.

Charter’s first-quarter results were bolstered by a 33.5% increase in mobile service revenues, adding 514,000 new mobile lines. Internet revenue grew by 1.8%, benefiting from promotional adjustments.

Key growth drivers include competitive pricing on Spectrum Mobile and expanded 5G services. The launch of satellite-based services in March through a partnership with Skylo enhances offerings.

Charter anticipates revenue and earnings growth rates of 0.3% and 13.2%, respectively, for this year, with earnings estimates up by 5.1% in the last 30 days.

Roku Inc.

Roku experienced increased user engagement on The Roku Channel and strong sales in its TV programs. The Roku OS dominates as the top-selling TV operating system in the U.S.

The Roku Channel reached around 145 million U.S. households, becoming the third-most popular app on the platform, with streaming hours up 82% year-over-year.

Roku forecasts revenue and earnings growth rates of 10.5% and 80.9% for the current year, with earnings estimates increasing by 39.3% in the past month.

Roblox Corp.

Roblox operates an online entertainment platform, offering applications that foster interaction and creativity among users. Further details on its performance will be provided in upcoming financial reports.