Back to top

Anatomy of Success: Callaway Golf Company (ELY)

Read MoreHide Full Article

The proven Zacks Rank is great method for both beginning and experienced investors to identify the strongest stocks to buy. The model, which emphasizes earnings estimates and estimate revisions, discovers companies of all shapes and sizes that are displaying the right characteristics to beat the market.

When a company earns the coveted Zacks Rank #1 (Strong Buy), it is displaying the right characteristics to outperform the market over the next one to three months. But of course, reaching this ideal rank is not an easy feat. Of the thousands of companies tracked by Zacks, only about 5% earn this designation.

In the story below, you will learn about one particular company that helped show the strength of the Zacks Rank. If investors had followed our ranking system when it flagged this sports equipment manufacturer, they would have witnessed massive profits.

Callaway Golf Company (ELY - Free Report)

Callaway is one of the largest golf apparel and equipment companies in the world, manufacturing respected gear for both professionals and amateurs. Callaway Golf consists of four powerful brands—Callaway, Odyssey, Toulon Design and OGIO—that offers golfers basically everything they need to play the sport.

Callaway has been flagged by the Zacks Rank system a number of times over the past year, with the stock first earning the #1 (Strong Buy) designation in this recent stretch on July 7, 2017. Analysts were clearly getting excited about its upcoming earnings report, and the stock would stay at or above a #3 (Hold) in the next few weeks leading up to the report.

This report saw Callaway post earnings of 34 cents per share, beating the Zacks Consensus Estimate by five cents. Callaway also saw solid revenue performance, topping our consensus estimate and improving about 24% year over year. Shortly after this report, the golf equipment giant earned a #2 (Buy) ranking, which it would hold for nine consecutive weeks.

Callaway would earn a Zacks Rank #1 (Strong Buy) again Oct. 27, 2017—just two days after another solid earnings report from the company. This time around, ELY notched earnings growth of a staggering 183% and revenue growth of 30%. Investors should also note that, once again, Callaway surpassed estimates on the top and bottom lines.

Analysts remained bullish on Callaway for the remainder of the year, and the stock received several more #2 (Buy) designations—never dipping below a #3 (Hold). In fact, it is currently sporting a #2 (Buy) at the time of this writing.

The below chart demonstrates the price performance for ELY and 12-month forward EPS estimate (in red), starting from the time the stock first earned a Zacks Rank #1 (Strong Buy).

As we can see, MBUU was a massive winner for those that followed the Zacks Rank. The stock is currently up more than 53% since earning a Zacks Rank #1 (Strong Buy) last year.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think.

See This Ticker Free >>




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Callaway Golf Company (ELY) - free report >>


More from Zacks Anatomy of Success

You May Like