Topgolf Callaway Brands (MODG) Tops Q3 Earnings and Revenue Estimates

Investors looking for stocks in the Leisure and Recreation Products sector might want to consider either Topgolf Callaway Brands (MODG) or Sportradar Group AG (SRAD). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Topgolf Callaway Brands has a Zacks Rank of #1 (Strong Buy), while Sportradar Group AG has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MODG has an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

MODG currently has a forward P/E ratio of 53.50, while SRAD has a forward P/E of 793. We also note that MODG has a PEG ratio of 6.18. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SRAD currently has a PEG ratio of 19.97.

Another notable valuation metric for MODG is its P/B ratio of 0.45. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, SRAD has a P/B of 17.50.

These are just a few of the metrics contributing to MODG's Value grade of A and SRAD's Value grade of F.

MODG has seen stronger estimate revision activity and sports more attractive valuation metrics than SRAD, so it seems like value investors will conclude that MODG is the superior option right now.

Zacks Investment Research

Topgolf Callaway Brands Corp. MODG is scheduled to report results for the third quarter of 2024 on Nov. 12, after market close. In the last reported quarter, earnings topped the Zacks Consensus Estimate by 50% and increased 7.7% on a year-over-year basis,

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Notably, the company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 235.9%.

Trend in Estimate Revision of MODG

The Zacks Consensus Estimate for loss has widened by a cent to 18 cents per share in the past 60 days. The company reported adjusted earnings per share (EPS) of 20 cents in the year-ago quarter.

Topgolf Callaway Brands Corp. Price and EPS Surprise

Topgolf Callaway Brands Corp. price-eps-surprise | Topgolf Callaway Brands Corp. Quote

The consensus mark for revenues is pegged at $981.3 million, implying a decrease of 5.7% from the year-ago quarter’s reported figure.

Factors to Shape Topgolf Callaway’s Quarterly Results

Topgolf Callaway's third-quarter 2024 revenues and earnings are expected to have declined year over year due to slowing consumer activity and macroeconomic challenges. These include the cumulative impact of negative foreign exchange trends, persistently high inflation and lower-than-expected same-venue sales at Topgolf. These factors are likely to have hurt MODG’s performance in the quarter to be reported.

For third-quarter 2024, MODG expects consolidated revenues in the range of $970-$990 million, down from $1,041 million reported in the year-ago quarter.

Meanwhile, increased marketing expenses for new product launches and higher airfreight costs are likely to have hurt MODG’s bottom line in the quarter to be reported. The company expects adjusted EBITDA in the range of $95-$105 million, down from $163 million reported in the year-ago quarter. This decline is likely to have been driven by revenue deleverage, higher marketing expenses and increased hedge losses compared with the prior year.

Segment-wise, the company expects Topgolf (which accounted for 42.7% of second-quarter total revenues) to see a low single-digit decline in revenues for the third quarter. Operating income is likely to be down more than revenues due to revenue deleverage and changes in the timing of marketing expenses. However, continued efficiencies are expected to have partially offset this. Same-venue sales are expected to have remained roughly the same in the third quarter.

Golf equipment (accounted for 35.7% of second-quarter total revenues) sales are expected to be down slightly, primarily due to unfavorable changes in foreign currency. Operating income is anticipated to have declined due to the revenue decrease and higher marketing spending related to new product launches.

Revenues in the Active Lifestyle (accounted for 21.6% of second-quarter total revenues) segment are expected to have declined year over year due to lower sales estimates for Jack Wolfskin and the Europe wholesale channel. Operating income is anticipated to have declined due to the revenue decrease.

The Zacks Consensus Estimate for revenues from the Active Lifestyle segment in the to-be-reported quarter is pegged at $271 million, indicating a year-over-year decline of 9.5%. The Zacks Consensus Estimate for the segment’s operating income is pegged at $20.15 million, down from $40 million reported in the year-ago quarter.

The Zacks Consensus Estimate for the operating income from Topgolf and Golf equipment segment is pegged at $11.51 million and $28.32 million, down from $38.9 million and $35.2 million reported in the year-ago quarter, respectively.

However, MODG is likely to have benefited from increased digital sales penetration and strong market share performance at Travis Mathew and Callaway Golf Equipment. Also, the emphasis on expansion through organic and inorganic options is likely to have aided its performance in the to-be-reported quarter.

The Zacks Consensus Estimate for revenues from Topgolf and Golf equipment segment is pegged at $464 million and $299 million, indicating year-over-year growth of 3.6% and 1.9%, respectively.

Also, continued improvement in venue operating efficiencies and cost-saving initiatives are expected to have aided its third-quarter’s bottom-line performance.

What the Zacks Model Unveils for MODG

Our proven model does not conclusively predict an earnings beat for Topgolf Callaway this time around. The company does not have the right combination of the two key ingredients, a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), to increase the odds of an earnings beat.

Earnings ESP of MODG: MODG has an Earnings ESP of 0.00% at present. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

MODG’s Zacks Rank: The company currently carries a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With Favorable Combination

Here are some stocks from the Zacks Consumer Discretionary space that investors may consider, as our model shows that these have the right combination of elements to beat estimates this time around.

Bowlero Corp. BOWL has an Earnings ESP of +3.00% and a Zacks Rank of 3 at present.

BOWL’s earnings for the to-be-reported quarter are expected to increase 1100% from the prior-year reported level. It posted earnings beat in one of the trailing four quarters and missed on the other three occasions, with an average negative surprise of 119.4%.

Norwegian Cruise Line Holdings Ltd. NCLH currently has an Earnings ESP of +3.28% and a Zacks Rank of 2.

NCLH’s earnings for the to-be-reported quarter are expected to increase 150% from the prior-year reported level. It posted earnings beat in three of the trailing four quarters and missed on one occasion, with an average surprise of 4.2%.

OneSpaWorld Holdings Limited OSW has an Earnings ESP of +1.21% and has a Zacks Rank of 2 at present.

OSW’s earnings for the to-be-reported quarter are expected to increase 75% from the prior-year reported level. It posted earnings beat in two of the trailing four quarters, met on one occasion and missed once, with an average negative surprise of 1.2%.

Zacks Investment Research

While "the trend is your friend" when it comes to short-term investing or trading, timing entries into the trend is a key determinant of success. And increasing the odds of success by making sure the sustainability of a trend isn't easy.

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There are several stocks that passed through the screen and

American Outdoor Brands, Inc.

(AOUT) is one of them. Here are the key reasons why this stock is a solid choice for "trend" investing.

A solid price increase over a period of 12 weeks reflects investors' continued willingness to pay more for the potential upside in a stock. AOUT is quite a good fit in this regard, gaining 7.6% over this period.

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Moreover, AOUT is currently trading at 81.2% of its 52-week High-Low Range, hinting that it can be on the verge of a breakout.

Looking at the fundamentals, the stock currently carries a Zacks Rank #1 (Strong Buy), which means it is in the top 5% of more than the 4,000 stocks that we rank based on trends in earnings estimate revisions and EPS surprises -- the key factors that impact a stock's near-term price movements.

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Zacks Investment Research

Madison Square Garden Entertainment (MSGE) came out with a quarterly loss of $0.40 per share versus the Zacks Consensus Estimate of a loss of $0.78. This compares to loss of $0.73 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 48.72%. A quarter ago, it was expected that this live entertainment company would post a loss of $0.57 per share when it actually produced earnings of $1.41, delivering a surprise of 347.37%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

MSG Entertainment, which belongs to the Zacks Media Conglomerates industry, posted revenues of $138.71 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 0.24%. This compares to year-ago revenues of $142.21 million. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

MSG Entertainment shares have added about 35.5% since the beginning of the year versus the S&P 500's gain of 25.2%.

What's Next for MSG Entertainment?

While MSG Entertainment has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for MSG Entertainment: favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #1 (Strong Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $2.61 on $419.09 million in revenues for the coming quarter and $1.66 on $978.29 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Media Conglomerates is currently in the top 25% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

American Outdoor Brands, Inc. (AOUT), another stock in the broader Zacks Consumer Discretionary sector, has yet to report results for the quarter ended October 2024.

This company is expected to post quarterly earnings of $0.22 per share in its upcoming report, which represents a year-over-year change of -12%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

American Outdoor Brands, Inc.'s revenues are expected to be $53.3 million, down 8% from the year-ago quarter.

Zacks Investment Research

Sportradar Group AG (SRAD) came out with quarterly earnings of $0.12 per share, beating the Zacks Consensus Estimate of $0.02 per share. This compares to earnings of $0.01 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 500%. A quarter ago, it was expected that this company would post earnings of $0.03 per share when it actually produced break-even earnings, delivering a surprise of -100%.

Over the last four quarters, the company has surpassed consensus EPS estimates two times.

Sportradar Group, which belongs to the Zacks Leisure and Recreation Products industry, posted revenues of $280.44 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 6.62%. This compares to year-ago revenues of $218.81 million. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Sportradar Group shares have added about 14.5% since the beginning of the year versus the S&P 500's gain of 24.3%.

What's Next for Sportradar Group?

While Sportradar Group has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Sportradar Group: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is breakeven on $320.11 million in revenues for the coming quarter and $0.02 on $1.18 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Leisure and Recreation Products is currently in the top 28% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

American Outdoor Brands, Inc. (AOUT), another stock in the same industry, has yet to report results for the quarter ended October 2024.

This company is expected to post quarterly earnings of $0.22 per share in its upcoming report, which represents a year-over-year change of -12%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

American Outdoor Brands, Inc.'s revenues are expected to be $53.3 million, down 8% from the year-ago quarter.

Zacks Investment Research

MasterCraft Boat Holdings, Inc. (MCFT) came out with quarterly earnings of $0.12 per share, beating the Zacks Consensus Estimate of $0.03 per share. This compares to earnings of $0.47 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 300%. A quarter ago, it was expected that this sport boats maker would post a loss of $0.22 per share when it actually produced a loss of $0.04, delivering a surprise of 81.82%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

MasterCraft Boat Holdings, Inc., which belongs to the Zacks Leisure and Recreation Products industry, posted revenues of $65.36 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 6.41%. This compares to year-ago revenues of $104.22 million. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

MasterCraft Boat Holdings, Inc. Shares have lost about 22.1% since the beginning of the year versus the S&P 500's gain of 21.2%.

What's Next for MasterCraft Boat Holdings, Inc.

While MasterCraft Boat Holdings, Inc. Has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for MasterCraft Boat Holdings, Inc. Mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.05 on $61.67 million in revenues for the coming quarter and $0.65 on $280.14 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Leisure and Recreation Products is currently in the top 29% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the same industry, American Outdoor Brands, Inc. (AOUT), is yet to report results for the quarter ended October 2024.

This company is expected to post quarterly earnings of $0.22 per share in its upcoming report, which represents a year-over-year change of -12%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

American Outdoor Brands, Inc.'s revenues are expected to be $53.3 million, down 8% from the year-ago quarter.

Zacks Investment Research