Ben Mahaney, Editor

About the Author Ben Mahaney, Editor

Smarter Analyst Site Personnel

Zack’s Bear of the Day: Callaway Golf

Callaway Golf (NYSE:ELY) became a Zacks #5 Rank last month as earnings estimates collapsed to a consensus projection of zero profit this year.

In January, Callaway reported a Q4 2014 loss of $0.54 per share on sales of $134.6 million, which represented +5.8% topline growth from the year-ago quarter, but was below Street estimates of $138.9 million.

The fourth quarter is always a difficult one for such a warm-weather focused leisure business, so the loss was not a surprise to most analysts.

And while analysts noted improving gross margins in the business, they see the strengthening US dollar as continuing to impact Callaway’s earnings power, especially in the second half of this year.

You can see in the detailed EPS tables below that despite projections for profitable quarters in the first half, it looks like it all gets wiped out by subsequent losing quarters.

Raymond James analysts, who reiterated their Strong Buy rating and $9.50 price target after the report, had this to say…

“Callaway owns ~19% of privately held TopGolf – one of the fastest growing consumer entertainment concepts in the market. It remains our view that the golf industry needs to consolidate – and ELY should benefit as the company can be either predator or prey.”

Since the stock has already run nearly to their price target in February, investors might want to “play through” this story until we see the estimates start to turn back up. The Zacks Rank will let you know.

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, blogger Zacks Investment Research has a total average return of 2.6% and a 56% success rate. Zacks Investment Research is Ranked #956 out of 4240 Bloggers

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