Callaway Earnings - Big Beat

Left Rough · May 4, 2017

Shares up about 20% YTD if After Hours reaction holds tomorrow. Pretty nice beat of $20M in revenue. I might stick around in the stock for another quarter when they finally start recognizing revenue for all those Epics that didn't ship in Q1!

Sales up 12% in the US, 18% in Japan, 22% in Europe. Comps are vs Q1 of last year (as opposed to Q4-2016). Guided revenue higher for the year.

The industry may be in secular decline, but this is very good for the portfolio, glad I bought into the Epic buzz (to invest, not actually own the product).

http://www.marketwatch.com/story/callaway-shares-drive-higher-as-earnings-outlook-beat-street-view-2017-05-04

Callaway Golf Co. ELY, +1.00% shares rallied in the extended session Thursday after the golf-equipment maker's quarterly results and outlook topped Wall Street estimates. Callaway shares jumped 11% to $13.50 after hours. The company reported adjusted earnings of 30 cents a share on revenue of $308.9 million. Analysts surveyed by FactSet had estimated earnings of 22 cents a share on revenue of $283.7 million. For the second quarter, Callaway forecast adjusted earnings of 28 cents to 31 cents a share on revenue of $290 million to $300 million. Analysts had estimated 16 cents a share on revenue of $266.1 million.

Carolinascrub · May 5, 2017

I know this is golf forums not investing but you think it's peaked? They're rolling out epic hybrids and irons as well so maybe time to still get in?

hammy83 · May 5, 2017

When you blow projections out of the water like that its great short time but long term, they need to comp those numbers next year and in a declining segment.

Left Rough · May 5, 2017

I know this is golf forums not investing but you think it's peaked? They're rolling out epic hybrids and irons as well so maybe time to still get in?

The stock hasn't been this high since 2009. I took half off of the table at $13.50 in Premarket this morning. It's a tough one... the best house on a bad block, so to speak, where they are gaining market share in an arguably declining market.

Stock recommendations are always tough... depends on the risk tolerance and diversification of the investor. But I don't think there's any rush to get in a these levels, say at $13 is it more likely to go back to $10 or jump to $16.... I'd say the odds are pretty even and you may want a more favorable setup before committing hard earned $!

Qwiklap · May 5, 2017

I agree -- hard to make bets on golf in a secular decline.

I made bets on "efficient" oil producers when oil prices were plummeting ... lost my Word not allowed. To use the analogy above -- I had a great house (investment) on a street where all the others were crack dens, and mine was priced like a crack den.

dlygrisse · May 5, 2017

Any idea of what 20 million in revenue means in terms of net profit? or what EBITA is?

The Pearl · May 5, 2017

As a general rule, never sell a stock that breaks out of a price base pattern on an earnings beat on high trading volume. Particularly if it is a new 52 week high. An all-time high is even better.

Left Rough · May 5, 2017

As a general rule, never sell a stock that breaks out of a price base pattern on an earnings beat on high trading volume. Particularly if it is a new 52 week high. An all-time high is even better.

Under normal circumstances I completely agree, from a purely technical trading perspective. Fundamentals look good, but I was never serious long term into the stock or did an appropriate level of DD. Bought a bunch of shares on wrx hype and to gain a few % points to justify a new epic. cost basis around $10.50, at a near 30% gain in less than 3 months felt it was found money.

I hope this keeps running... Would mean good things for the golf industry... If you read the earnings slides and they have commented on staggering product releases more responsibly... A welcome trend for all.