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Callaway (ELY) Earnings Preview

by | May 8, 2021

Callaway (ELY) reporting earnings on Monday May 10 after the close with the Street looking for $0.05 on $603.11M in sales. ELY has traded lower in each of its last three but room for surprise this quarter with golf volumes improving and positive read-through from Acushnet (GOLF). They noted that not only is product demand high but rounds of play were healthy in Q1 and inventories are more normalized. The average closing move for shares has been 3% and a max move of 5.9%. The current implied move is 7%. The $5.9B company trades 185X earnings, 3.7X sales, and 31.5X FCF. Shares are setting up just below a multi-week breakout at $32 with a measured move out to $38. ELY recently completed their merger with Top Golf, a deal that gives them exposure to not only play on the course but also casual play as the open-air gaming venues reopen. Analysts have an average target for shares of $30 with a Street High $40. B Riley positive on 4/14 noting that the Masters could create new international tailwinds as Hideki Matsuyama’s Master’s win could drive higher golf-related sales in Japan given he is the first Japanese man to claim a major title. They also think TopGolf will likely beat Callaway’s guidance as the economy has started to see an acceleration of re-opening from the time the guidance was given in January. Short interest is 5.9% and down from 18% in December. Hedge fund ownership fell 12% in Q4.

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