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Topgolf Callaway Brands (MODG)
NYSE:MODG

Topgolf Callaway Brands (MODG) AI Stock Analysis

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Topgolf Callaway Brands

(NYSE:MODG)

Rating:54Neutral
Price Target:
$7.50
▼(-3.97%Downside)
Topgolf Callaway Brands faces substantial financial challenges, including high leverage and net losses, impacting its overall score negatively. However, positive short-term technical indicators and strategic corporate moves, such as the sale of Jack Wolfskin, provide some optimism. The company's ability to meet full-year guidance amidst macroeconomic challenges is a testament to its operational resilience, though longer-term valuation concerns remain significant.
Positive Factors
Business 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's 1Q EBITDA came in well ahead of expectations primarily due to better than expected margin performance in the company's core product businesses.
Liquidity
Proceeds from the sale of Jack Wolfskin improve the company's balance sheet and liquidity outlook, enhancing the investment case before the planned TopGolf spin.
Negative Factors
Corporate Events
Corporate events bookings have softened, driving a reduction in the company's '25 SVS outlook.
Macro Environment
Greater macro concerns are seen as adding incremental downside risk to guidance with seemingly less cushion should demand trends deteriorate.
Sales Performance
TopGolf SVS remain pressured, down 12% in 1Q with weaker trends continuing into April.

Topgolf Callaway Brands (MODG) vs. SPDR S&P 500 ETF (SPY)

Topgolf Callaway Brands Business Overview & Revenue Model

Company DescriptionTopgolf Callaway Brands Corp. (MODG) is a leading sports and entertainment company that operates in the sectors of golf equipment, entertainment venues, and active lifestyle products. The company is renowned for its Topgolf venues, which combine technology-driven golf entertainment with food and beverage services, and its Callaway Golf division, which manufactures and sells high-quality golf equipment, including clubs, balls, and accessories. Additionally, the company owns other brands such as Odyssey, TravisMathew, and Jack Wolfskin, which offer apparel and lifestyle products.
How the Company Makes MoneyTopgolf Callaway Brands generates revenue through several key streams. A significant portion comes from its Topgolf venues, which earn money through gameplay fees, food and beverage sales, and event hosting. The Callaway Golf division contributes revenue by selling golf equipment, such as clubs and balls, to both individual customers and retail partners. The company's other brands, including Odyssey, TravisMathew, and Jack Wolfskin, expand its revenue base by offering golf accessories, apparel, and active lifestyle products. Strategic partnerships, brand licensing, and a global distribution network further bolster the company's financial performance.

Topgolf Callaway Brands Earnings Call Summary

Earnings Call Date:May 12, 2025
(Q1-2025)
|
% Change Since: -1.14%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong performance in the Golf Equipment segment and successful strategic initiatives, including the divestment of Jack Wolfskin. However, significant challenges in the Topgolf segment, increased tariffs, and economic uncertainty present concerns.
Q1-2025 Updates
Positive Updates
Strong Q1 Performance
Q1 was a strong quarter for Topgolf Callaway Brands as they met or exceeded expectations in all business segments.
Margin Improvement in Golf Equipment
The Golf Equipment segment saw operating margins improve by 24% due to cost reduction and margin initiatives.
Positive Consumer Response to Initiatives
Initiatives like Sunday Funday and Topgolf Nights drove more than a 20% improvement in same-day traffic.
Successful Strategic Divestment
An agreement to sell the Jack Wolfskin brand was announced, enabling greater business focus and financial flexibility.
Effective Cost Management
Proactive cost and efficiency improvements helped maintain financial guidance despite macroeconomic challenges.
Negative Updates
Increased Tariff Impact
Tariffs are expected to have an unmitigated impact of approximately $25 million, up from the previously forecasted $5 million.
Decline in Topgolf Same Venue Sales
Topgolf's same venue sales were down approximately 12% for the quarter.
Challenges in Corporate Events
Corporate events were down 13% due to reduced corporate spending and economic uncertainty.
Lowered Topgolf Revenue Guidance
The full year Topgolf revenue estimates were lowered by $45 million due to decreased same venue sales.
Economic Uncertainty
The company noted increased risk of a slowing consumer environment and economic uncertainty affecting demand.
Company Guidance
During the Q1 2025 earnings call, Topgolf Callaway Brands highlighted that they met or exceeded expectations across all business segments. The company noted a $5 million forecasted tariff impact had risen to $25 million due to current rates, but efforts to optimize operations and accelerate cost reduction initiatives could mitigate some of the impact. Golf Equipment reported revenues of $444 million, with operating margins benefiting from recent cost and margin initiatives. Topgolf's same venue sales were down 12%, with new initiatives like Sunday Funday driving more than a 20% increase in same-day traffic. The company lowered Topgolf's revenue guidance but maintained its full-year EBITDA guidance, expecting significant long-term margin growth. Despite macroeconomic challenges, Topgolf Callaway remains confident in achieving full-year guidance through strong operational capabilities and strategic initiatives.

Topgolf Callaway Brands Financial Statement Overview

Summary
Topgolf Callaway Brands is facing significant financial challenges with declining revenues and high net losses, impacting its profitability and operational efficiency. The high leverage increases financial risk, though recent improvements in free cash flow provide some positive outlook. Strategic cost management and revenue enhancement are essential to improve financial standing.
Income Statement
35
Negative
Topgolf Callaway Brands has experienced a decline in revenue from 2023 to TTM (Trailing-Twelve-Months), with significant net losses and negative EBIT and EBITDA margins, indicating operational inefficiencies and profitability challenges. The gross profit margin remains relatively high, but the company struggles with high costs leading to substantial net losses.
Balance Sheet
40
Negative
The company maintains a high level of debt, as indicated by an increased debt-to-equity ratio in the TTM period. While the equity ratio shows moderate stability, the high leverage could be a potential risk if not managed properly. The return on equity has been negative in recent periods due to net losses, affecting the financial health of the company.
Cash Flow
50
Neutral
Free cash flow has shown improvement in the TTM period compared to previous years, indicating better cash management. However, the operating cash flow to net income ratio suggests that cash generation from operations is not yet strong enough to cover net losses. The company needs to focus on improving operational efficiency to sustain cash flows.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
4.19B4.24B4.28B4.00B3.13B1.59B
Gross Profit
2.68B2.65B2.65B2.41B1.86B657.59M
EBIT
-1.26B-1.26B237.70M256.80M-47.82M243.02M
EBITDA
-965.70M-973.60M484.70M455.10M707.45M-5.69M
Net Income Common Stockholders
-1.45B-1.45B95.00M157.90M322.00M-126.93M
Balance SheetCash, Cash Equivalents and Short-Term Investments
317.00M445.00M398.70M180.20M352.22M366.12M
Total Assets
7.69B7.64B9.12B8.59B7.75B1.98B
Total Debt
1.40B4.14B4.36B2.91B2.95B894.87M
Net Debt
1.08B3.70B3.97B2.73B2.60B528.75M
Total Liabilities
5.27B5.23B5.24B4.82B4.06B1.30B
Stockholders Equity
2.43B2.41B3.88B3.77B3.68B675.64M
Cash FlowFree Cash Flow
362.20M86.60M-118.10M-570.60M-44.02M188.98M
Operating Cash Flow
569.60M382.00M364.70M-35.10M278.26M228.24M
Investing Cash Flow
-209.20M-297.30M-542.90M-535.10M-161.86M-59.21M
Financing Cash Flow
-5.80M-23.60M375.80M425.30M-124.10M96.07M

Topgolf Callaway Brands Technical Analysis

Technical Analysis Sentiment
Positive
Last Price7.81
Price Trends
50DMA
6.58
Positive
100DMA
6.83
Positive
200DMA
8.10
Negative
Market Momentum
MACD
0.17
Negative
RSI
66.05
Neutral
STOCH
93.20
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MODG, the sentiment is Positive. The current price of 7.81 is above the 20-day moving average (MA) of 6.61, above the 50-day MA of 6.58, and below the 200-day MA of 8.10, indicating a neutral trend. The MACD of 0.17 indicates Negative momentum. The RSI at 66.05 is Neutral, neither overbought nor oversold. The STOCH value of 93.20 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
81
Outperform
$4.30B20.3227.15%1.28%2.07%24.87%
76
Outperform
$2.69B15.2025.01%8.38%3.69%
63
Neutral
$6.98B11.412.80%4.24%2.68%-24.94%
62
Neutral
$2.35B11.32-52.57%-0.92%0.80%
57
Neutral
$1.25B-108.04%2.47%6.65%-111.16%
54
Neutral
$1.41B-46.00%-1.74%-2020.38%
51
Neutral
$440.52M22.27%-3.17%-194.72%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
MODG
Topgolf Callaway Brands
7.81
-7.51
-49.02%
GOLF
Acushnet Holdings
72.74
9.26
14.59%
PRKS
United Parks & Resorts
42.45
-9.04
-17.56%
YETI
Yeti Holdings
31.51
-10.01
-24.11%
LUCK
Lucky Strike Entertainment
8.98
-3.98
-30.71%
XPOF
Xponential Fitness
8.66
-2.99
-25.67%

Topgolf Callaway Brands Corporate Events

M&A TransactionsBusiness Operations and Strategy
Topgolf Callaway Sells Jack Wolfskin to ANTA Sports
Positive
Jun 5, 2025

On May 31, 2025, Topgolf Callaway Brands completed the sale of its Jack Wolfskin business to ANTA Sports for $290 million. This transaction marks a strategic shift for the company, allowing it to focus on its core businesses and enhance financial flexibility, particularly in anticipation of separating Topgolf from its core operations.

The most recent analyst rating on (MODG) stock is a Buy with a $13.50 price target. To see the full list of analyst forecasts on Topgolf Callaway Brands stock, see the MODG Stock Forecast page.

Shareholder MeetingsBusiness Operations and Strategy
Topgolf Callaway Brands Approves Amended 2022 Incentive Plan
Neutral
Jun 2, 2025

On May 29, 2025, Topgolf Callaway Brands Corp. held its annual meeting of shareholders, where the amended and restated 2022 Incentive Plan was approved. This plan, effective from the meeting date, increases the shares available for issuance and outlines specific terms for stock options and awards. The meeting also saw the approval of other proposals, including the election of directors, ratification of Deloitte & Touche LLP as the independent auditor, and an advisory vote on executive compensation, all of which reflect the company’s ongoing governance and operational strategies.

The most recent analyst rating on (MODG) stock is a Buy with a $23.00 price target. To see the full list of analyst forecasts on Topgolf Callaway Brands stock, see the MODG Stock Forecast page.

M&A TransactionsBusiness Operations and Strategy
Topgolf Callaway Sells Jack Wolfskin to ANTA Sports
Positive
Apr 10, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.