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Topgolf Callaway Brands (MODG)
NYSE:MODG
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Topgolf Callaway Brands
(NYSE:MODG)
44Neutral
Positive Factors
Financial performance
MODG delivered solid 4Q performance vs. expectations with EBITDA ~30% above the Street driven by better sales performance in all three segments and strong flow-through.
Product launch
Callaway's POS increased 4.2% year over year in 4Q, led by the launch of its Odyssey Ai-ONE and Ai-ONE Milled product line.
Strategic initiatives
MODG essentially has no manufacturing exposure in China for US products, minimizing tariff risk.
Negative Factors
Guidance
’25 guidance came in well below consensus with management calling for consolidated EBITDA of $415-505M vs. the Street’s ~$600M per Visible Alpha.
Market competition
Potential market share headwinds for MODG given no significant golf ball launch vs. new Titleist Pro V1 & Pro V1 X and in the last 3 odd-numbered years - MODG has lost share in clubs as all major OEMs have significant wood launches.
Topgolf performance
Credit card data suggests risk to 4Q Topgolf comps as observed sales are down -6.1%, showing a deceleration from 3Q.
Topgolf Callaway Brands (MODG) vs. S&P 500 (SPY)
Market Cap
$1.25B
Dividend YieldN/A
Average Volume (3M)3.45M
Price to Earnings (P/E)―
Beta (1Y)1.03
Revenue Growth-1.06%
EPS Growth-1641.55%
CountryUS
Employees30,000
SectorConsumer Cyclical
Sector Strength54
IndustryLeisure
Share Statistics
EPS (TTM)-7.90
Shares Outstanding183,396,360
10 Day Avg. Volume2,836,792
30 Day Avg. Volume3,448,164
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.29
Price to Cash Flow (P/CF)7.20
P/FCF Ratio7.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$9.69Price Target Upside41.87% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
Topgolf Callaway Brands Business Overview & Revenue Model
Company DescriptionTopgolf Callaway Brands (MODG) is a leading global sports entertainment company that operates in the golf and lifestyle sectors. It is well-known for its innovative combination of technology-driven golf entertainment venues and high-quality golf equipment. The company's core offerings include Topgolf venues, which provide a unique social experience with golf games for all skill levels, and Callaway-branded golf clubs, balls, and accessories. Through these products and services, Topgolf Callaway Brands caters to both recreational and professional golfers, as well as individuals seeking entertainment and leisure activities.
How the Company Makes MoneyTopgolf Callaway Brands generates revenue primarily through its Topgolf venues and its golf equipment sales. The Topgolf venues contribute to the company's earnings by offering a range of entertainment experiences, including golf games, food and beverage services, and event hosting, which attract a diverse customer base. These venues are strategically located to maximize foot traffic and revenue potential. Additionally, the company earns significant income through the sale of Callaway-branded golf equipment, which includes golf clubs, balls, and accessories. This segment benefits from Callaway's strong brand reputation and ongoing innovation in golf technology. Furthermore, Topgolf Callaway Brands leverages strategic partnerships and sponsorships with other companies in the sports and entertainment industries to enhance its offerings and expand its market reach. These partnerships, along with a focus on technological advancements and customer engagement, are key factors contributing to the company's financial performance.
Topgolf Callaway Brands Financial Statement Overview
Summary
Topgolf Callaway Brands faces significant financial challenges, characterized by declining revenues, persistent losses, and high debt levels. Positive signs in cash flow generation are overshadowed by negative profitability metrics and high leverage.Income Statement
The income statement of Topgolf Callaway Brands shows a significant decline in profitability over the TTM period, with a negative net profit margin of -34.16% and a gross profit margin of 64.72%. The company experienced a revenue decline of 1.06% in the TTM compared to the previous year. The EBIT and EBITDA margins are negative, indicating operational challenges and increased costs.38
Negative
Balance Sheet
The balance sheet reveals a high level of debt with a debt-to-equity ratio of 0.61 in the TTM period. The return on equity (ROE) is negative due to net losses. The equity ratio stands at 31.52%, reflecting a moderate level of financial stability. However, the decrease in stockholders' equity over the recent periods is concerning.45
Neutral
Cash Flow
The cash flow statement shows some positive signs with an operating cash flow to net income ratio of -0.26 in the TTM, indicating better cash generation relative to net income losses. Free cash flow has improved to $86.6M in the TTM, recovering from negative figures in previous years. However, the free cash flow to net income ratio is negative, highlighting cash flow volatility.52
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.24B | 4.28B | 4.00B | 3.13B | 1.59B | Gross Profit |
| 2.84B | 2.65B | 2.41B | 1.86B | 657.59M | EBIT |
| -1.26B | 237.70M | 256.80M | -47.82M | 243.02M | EBITDA |
| -973.60M | 484.70M | 455.10M | 707.45M | -5.69M | Net Income Common Stockholders |
| -1.45B | 95.00M | 157.90M | 322.00M | -126.93M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 445.00M | 398.70M | 180.20M | 352.22M | 366.12M | Total Assets |
| 7.64B | 9.12B | 8.59B | 7.75B | 1.98B | Total Debt |
| 1.47B | 4.36B | 2.91B | 2.95B | 894.87M | Net Debt |
| 1.02B | 3.97B | 2.73B | 2.60B | 528.75M | Total Liabilities |
| 5.23B | 5.24B | 4.82B | 4.06B | 1.30B | Stockholders Equity |
| 2.41B | 3.88B | 3.77B | 3.68B | 675.64M |
| Cash Flow | Free Cash Flow | |||
| 86.60M | -118.10M | -570.60M | -44.02M | 188.98M | Operating Cash Flow |
| 382.00M | 364.70M | -35.10M | 278.26M | 228.24M | Investing Cash Flow |
| -297.30M | -542.90M | -535.10M | -161.86M | -59.21M | Financing Cash Flow |
| -23.60M | 375.80M | 425.30M | -124.10M | 96.07M |
Topgolf Callaway Brands Technical Analysis
Negative
6.83
Price Trends
7.20
Negative
7.89
Negative
10.22
Negative
Market Momentum
-0.12
Negative
53.25
Neutral
89.94
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MODG, the sentiment is Negative. The current price of 6.83 is above the 20-day moving average (MA) of 6.35, below the 50-day MA of 7.20, and below the 200-day MA of 10.22, indicating a neutral trend. The MACD of -0.12 indicates Negative momentum. The RSI at 53.25 is Neutral, neither overbought nor oversold. The STOCH value of 89.94 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MODG.
Topgolf Callaway Brands Risk Analysis
Topgolf Callaway Brands disclosed 70 risk factors in its most recent earnings report. Topgolf Callaway Brands reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Topgolf Callaway Brands Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $18.66B | 19.96 | 39.80% | ― | 19.40% | 32.70% | |
71 Outperform | $4.02B | 20.17 | 26.30% | 1.27% | 3.15% | 15.44% | |
63 Neutral | $98.42B | 22.42 | 31.93% | 2.24% | -7.16% | -12.12% | |
59 Neutral | $12.76B | 11.27 | 1.14% | 3.69% | 1.25% | -20.97% | |
50 Neutral | $6.42B | ― | -16.13% | 2.12% | -8.42% | 57.91% | |
44 Neutral | $1.25B | ― | -46.06% | ― | -1.06% | -1641.55% | |
42 Neutral | $2.68B | ― | -6.12% | ― | -7.47% | -131.70% |
* Consumer Cyclical Sector Average
Performance Comparison
MODG
Topgolf Callaway Brands
6.83
-9.31
-57.68%
DECK
Deckers Outdoor
122.97
-33.35
-21.33%
GOLF
Acushnet Holdings
67.04
1.54
2.35%
NKE
Nike
66.54
-25.86
-27.99%
VFC
VF
16.47
1.69
11.43%
UAA
Under Armour
6.39
-0.87
-11.98%
Topgolf Callaway Brands Earnings Call Summary
Earnings Call Date: Feb 24, 2025 | % Change Since: 1.94% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook, highlighting strong performance in Golf Equipment and impressive free cash flow generation, while also acknowledging significant challenges such as declining same venue sales at Topgolf and substantial foreign exchange headwinds. Despite these pressures, the company remains optimistic about its strategic product launches and operational efficiencies.Highlights
Strong Performance in Golf Equipment and TravisMathew
Golf Equipment and TravisMathew delivered year-over-year growth on the top and bottom line, with Golf Equipment maintaining its leadership position in U.S. golf club market share and driving record share in golf ball.
Record Q4 Venue Level Margins for Topgolf
Topgolf delivered better than expected same venue sales on improving traffic trends and record Q4 venue level margins.
Significant Free Cash Flow Generation
Topgolf generated over $100 million in free cash flow, marking the second consecutive year of positive cash generation. The total company free cash flow was $203 million, strengthening the financial position.
Exciting New Product Launches
The launch of the Elyte product line in clubs and Square 2 Square in putters has received positive market feedback, bolstering optimism for the year.
Lowlights
Topgolf Same Venue Sales Decline
Same venue sales remained pressured in the fourth quarter at down 8% with walk-in or 1-2 bay down 10% and 3+ bay events down 5%.
Substantial Impact from Foreign Exchange Headwinds
Year-over-year headwinds from foreign exchange are expected to negatively impact EBITDA by approximately $75 million, with FX alone impacting the top line by $60 million and the bottom line by $40 million.
Challenges in Active Lifestyle Segment
Market conditions in the Active Lifestyle segment were challenging in 2024 with softness in global apparel markets. Jack Wolfskin also faced lower sales in Europe.
Q1 2025 Guidance Reflects Continued Pressure
Q1 same venue sales trends have been softer than expected due to factors like LA fires and severe cold weather, leading to an anticipated decline of 10% to 13%.
Company Guidance
In the Topgolf Callaway Brands Fourth Quarter 2024 Conference Call, the company reported strong performance in several key areas despite facing some headwinds. Topgolf achieved $337 million in EBITDA with venue level EBITDA margins at approximately 34%, flat compared to 2023 and up 500 basis points from 2019, while generating over $100 million in free cash flow. The Golf Equipment segment maintained its leadership in the U.S. golf club market share and achieved record share in golf balls, contributing to a total company free cash flow of $203 million. Looking ahead to 2025, the company anticipates foreign exchange and other headwinds to negatively impact core business EBITDA by approximately $75 million, with foreign exchange alone impacting the top line by $60 million and the bottom line by $40 million. Despite these challenges, operational improvements are expected to mitigate some of these impacts, with anticipated organic EBITDA growth of approximately 6% driven by gross margin improvements and cost savings. Topgolf's 2025 guidance projects EBITDA around $270 million with same venue sales down mid-single digits for the year and venue level EBITDA margins remaining flat. The company's consolidated 2025 EBITDA guidance is approximately $460 million, with expectations to remain free cash flow positive.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.