GOLF

Acushnet Holdings Corp

Consumer


Presented:09/15/2020
Price:$34.06
Cap:$2.53B
Current Price:$63.49
Cap:$3.92B

Presented

Date09/15/2020
Price$34.06
Market Cap$2.53B
Ent Value$3.05B
P/E Ratio43.64x
Book Value$11.87
Div Yield1.78%
Shares O/S74.29M
Ave Daily Vol279,678
Short Int7.84%

Current

Price$63.49
Market Cap$3.92B
Acushnet Holdings Corp. engages in the design, development, manufacture, and distribution of golf products. It operates through the following segments: Titleist Golf Balls, Titleist Golf Clubs, Titleist Golf Gear, FootJoy Golf Wear, and Other. The Titleist Golf Balls segment involves in the design and manufacture of golf balls. The Titleist Golf Clubs segment designs, assembles, and sells golf clubs such as drivers, fairways, hybrids, and irons. The Titleist Golf Gear segment offers golf bags, headwear, gloved, travel gear, and head covers. The FootJoy Golf Wear segment includes golf shoes, gloves, and apparel. The company was founded by Phil Young in 1910 and is headquartered in Fairhaven, MA.

Publicly traded companies mentioned herein: Acushnet Holdings Corp (GOLF), adidas AG (ADS GR), Nike Inc (NKE)

Highlights

The presenter is long shares of Acushnet Holdings Corp (GOLF), the owner of major golf brands like Titleist and FootJoy. They design, manufacture, and distribute higher end equipment, apparel and golf balls. He sees near term demand tailwinds driven by the combination of work from home (WFH) and social distancing. Due to both of these factors there has been a massive acceleration in rounds played data for U.S. courses. As a manufacturer of golf equipment, GOLF stands to benefit from this increase in rounds. Despite positive commentary on sales QTD, management’s guidance for Q3 was surprisingly conservative. The presenter doesn’t believe this conservative guidance lines up with his due diligence and the larger underlying trends. If GOLF experiences revenue growth of 7% - 13% in Q3, it would be enormous for the stock as the company normally doesn’t beat. In terms of valuation, he sees $300MM in EBITDA by 2022 vs. the Street’s $240MM. Historically, golf wasn’t a growth industry and tends to trade around 10x-12x EBITDA multiple on a forward basis. For comparison, Adidas trades at 20x. While he doesn’t expect it to reach that level, there is room for multiple expansion. With slightly multiple expansion to 14x - 15x, the stock would trade up to the high-$50s vs. ~$33/share today. 

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Idea Discussion

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