Topgolf Callaway Brands (MODG) AI Stock Analysis

• Market Cap: $1.25B
• Dividend Yield: N/A
• Average Volume (3M): 3.00M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.79
• Revenue Growth: -1.06%
• EPS Growth: -1641.55%
• Country: US
• Employees: 30,000
• Sector: Consumer Cyclical
• Sector Strength: 56
• Industry: Leisure
• EPS (TTM): -7.90
• Shares Outstanding: 183,396,360
• 10 Day Avg. Volume: 3,061,792
• 30 Day Avg. Volume: 2,997,892
• PEG Ratio: N/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 Ratio: 7.20
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $9.06
• Price Target Upside: 35.02% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

Topgolf Callaway Brands faces significant financial and operational challenges, including persistent losses, high debt, and bearish technical indicators. While the earnings call highlighted some strengths in the Golf Equipment segment and positive cash flow trends, the substantial headwinds and negative valuation metrics weigh heavily on the stock. The recent sale of the Jack Wolfskin business is a positive corporate event, offering potential for improved financial focus.

Positive Factors

Corporate Strategy

The sale of Jack Wolfskin is seen as a positive move because it removes a slower growing and less profitable segment from the company's core legacy golf business.

Financial Performance

MODG delivered solid 4Q performance vs. expectations with EBITDA approximately 30% above the Street driven by better sales performance in all three segments and strong flow-through.

Product Launches

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.

Negative Factors

Earnings Guidance

'25 guidance came in well below consensus with management calling for consolidated EBITDA of $415-505M vs. the Street’s approximately $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.

Weather Impact

There is expected pressure on Topgolf sales due to severe cold weather and fires impacting the performance.

Topgolf Callaway Brands Business Overview & Revenue Model

Company Description

Topgolf Callaway Brands Corp. designs, manufactures, and sells golf equipment, golf and lifestyle apparel, and other accessories. It operates through three segments: Topgolf; Golf Equipment; and Apparel, Gear and Other. The Topgolf segment operates Topgolf venues equipped with technology-enabled hitting bays, multiple bars, dining areas, and event spaces, as well as Toptracer ball-flight tracking technology; and World Golf Tour digital golf game. The Golf Equipment segment provides drivers, fairway woods, hybrids, irons, wedges and packaged sets, putters, and pre-owned golf clubs under the Callaway and Odyssey brands, as well as golf balls under the Callaway Golf and Strata brands. The Apparel, Gear and Other segment offers golf apparel and footwear; golf accessories, including golf bags, golf gloves, headwear, and practice aids under the Callaway brand; and golf and lifestyle apparel, hats, luggage and accessories, footwear, belts, facemasks, sunglasses, socks, and underwear under the TravisMathew brand. This segment also provides storage gear for sport and personal use, such as backpacks; travel, duffel, and golf bags; and storage gear accessories, as well as outerwear, headwear, and accessories under the OGIO brand. In addition, it offers outdoor apparel comprising jackets, trousers, dresses, skirts, and tops; and footwear and outdoor equipment, including packs and bags, travel bags, tents, sleeping bags, and accessories under the Jack Wolfskin brand. The company sells its products through golf retailers, sporting goods retailers, on-line retailers, mass merchants, department stores, third-party distributors, and mail order stores, as well as through its websites in the United States and approximately 120 countries. The company was formerly known as Callaway Golf Company and changed its name to Topgolf Callaway Brands Corp. in September 2022. Topgolf Callaway Brands Corp. was incorporated in 1982 and is headquartered in Carlsbad, California.

How the Company Makes Money

Topgolf 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, with a negative net profit margin and operational losses. High debt levels and a decline in stockholders' equity are concerning, though there is some improvement in cash flow generation.

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.

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.

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.

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

• Technical Analysis Sentiment: Neutral
• Last Price: 6.71
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MODG, the sentiment is Neutral. The current price of 6.71 is above the 20-day moving average (MA) of 6.33, above the 50-day MA of 6.49, and below the 200-day MA of 9.26, indicating a neutral trend. The MACD of 0.02 indicates Negative momentum. The RSI at 55.27 is Neutral, neither overbought nor oversold. The STOCH value of 82.81 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for MODG.

Topgolf Callaway Brands Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
YETI	72 Outperform	$2.40B	14.12	24.01%	―	10.32%	6.05%
GOLF	69 Neutral	$3.78B	18.71	26.30%	1.42%	3.15%	15.44%
PRKS	64 Neutral	$2.40B	11.29	-52.57%	―	-0.07%	6.29%
Sector *	60 Neutral	$6.78B	11.63	3.24%	4.20%	2.36%	-21.91%
LUCK	49 Neutral	$1.32B	―	-108.04%	2.48%	8.60%	-99.28%
MODG	47 Neutral	$1.25B	―	-46.06%	―	-1.06%	-1641.55%
XPOF	40 Underperform	$373.62M	―	22.27%	―	0.34%	-309.65%

Topgolf Callaway Brands Corporate Events

Topgolf Callaway Sells Jack Wolfskin to ANTA Sports

Topgolf Callaway Brands Corp. announced on April 10, 2025, that it has entered into an agreement to sell its Jack Wolfskin business to ANTA Sports for $290 million in cash. This strategic move is expected to enhance the company’s financial flexibility and allow it to focus on its core operations, with the transaction anticipated to close by the late second quarter or early third quarter of 2025, pending regulatory approvals.

Spark’s Take on MODG Stock

According to Spark, TipRanks’ AI Analyst, MODG is a Neutral.

The overall score of 47 reflects significant financial and operational challenges, including persistent losses, high debt, and bearish technical indicators. While the earnings call highlighted some strengths in the Golf Equipment segment and positive cash flow trends, the substantial headwinds and negative valuation metrics weigh heavily on the stock.

To see Spark’s full report on MODG stock, click here.