What Happened?
A number of stocks fell in the afternoon session after the latest U.S. consumer confidence report revealed underlying weakness despite a headline increase, raising concerns about future spending. While the Conference Board's headline Consumer Confidence Index rose to 97.2 in July, the details painted a more cautious picture for investors. The Present Situation Index, a measure of consumers' assessment of current business and labor market conditions, actually fell. More telling for the sector, the report showed a decline in buying intentions for major discretionary items such as homes, cars, and most appliances. This combination of factors signals potential weakness in future consumer spending, casting a shadow over companies that rely on non-essential purchases.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Specialized Consumer Services company Mister Car Wash (NASDAQ:MCW) fell 3.7%. Is now the time to buy Mister Car Wash? Access our full analysis report here, it’s free.
- Leisure Facilities company European Wax Center (NASDAQ:EWCZ) fell 3.9%. Is now the time to buy European Wax Center? Access our full analysis report here, it’s free.
- Apparel and Accessories company Guess (NYSE:GES) fell 3%. Is now the time to buy Guess? Access our full analysis report here, it’s free.
- Travel and Vacation Providers company Pursuit (NYSE:PRSU) fell 5.5%. Is now the time to buy Pursuit? Access our full analysis report here, it’s free.
- Consumer Electronics company Peloton (NASDAQ:PTON) fell 3.4%. Is now the time to buy Peloton? Access our full analysis report here, it’s free.
Zooming In On Pursuit (PRSU)
Pursuit’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 5 months ago when the stock gained 6.5% on the news that the company reported strong fourth-quarter 2024 results, which blew past analysts' sales, earnings, and EBITDA expectations. In addition, its full-year EBITDA guidance outperformed Wall Street's estimates by a wide margin.
The real story for the quarter was the benefit anticipated from the sale of its GES business. This move improved its debt structure, freeing up substantial cash for future investments.
On the growth side, revenue grew 8.5% year-on-year, driven by higher ticket sales at key attractions, though some locations saw weaker performance due to the lingering effects of a wildfire that disrupted operations in Jasper National Park. Excluding those affected properties, revenue increased at a much stronger 15.3% clip. Zooming out, we think this was a solid quarter.
Pursuit is down 28.4% since the beginning of the year, and at $29.82 per share, it is trading 34.5% below its 52-week high of $45.51 from November 2024. Investors who bought $1,000 worth of Pursuit’s shares 5 years ago would now be looking at an investment worth $1,971.
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