ELY

Callaway Golf Co.

Consumer


Presented:05/27/2021
Price:$37.06
Cap:$6.84B
Current Price:$10.43
Cap:$1.92B

Presented

Date05/27/2021
Price$37.06
Market Cap$6.84B
Ent Value$5.57B
P/E Ratio71.56x
Book Value$19.56
Div Yield0.03%
Shares O/S184.67M
Ave Daily Vol1,938,681
Short IntN/A

Current

Price$10.43
Market Cap$1.92B
Callaway Golf Co. engages in the manufacture and distribution of golf equipment and accessories. It operates through the following segments: Golf Equipment; and Apparel, Gear, and Other. The Golf Equipment segment focuses in the designs, manufactures, and selling of a full line of golf equipment. The Apparel, Gear, and Other segment involves in the development and selling of soft goods products under the Callaway, TravisMathew, OGIO, and Jack Wolfskin brands. The company was founded by Ely Reeves Callaway, Jr. in 1982 and is headquartered in Carlsbad, CA.

Publicly traded companies mentioned herein: Acushnet Holdings Corp (GOLF), Callaway Golf Co (ELY), Domino’s Pizza Inc (DPZ), Yum! Brands Inc (YUM) 

Highlights

The presenter is long shares of Callaway Golf Co (ELY) and believes the company stands to benefit from its position as the dominant club manufacturer in the US and its recently completed acquisition of TopGolf. As a result of the acquisition, 50% of the business is now TopGolf with clubs/apparel making up the remaining 50%. The current CEO, Oliver G. Brewer III, is a proverbial sandbagger and looking at recent trends, plus where the Street currently stands after ELY’s most recent earnings report, the presenter believes ELY will blow away numbers going forward. On a SOTP basis, he applies a 15x EBITDA multiple to ELY’s golf business, which is in line with where GOLF trades, and a 25x EBITDA multiple on the TopGolf business. This blends out to a 20x multiple and would result in a stock price of ~$60/share in about a year’s time. 

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Idea Discussion

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