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Bear of the Day: Callaway Golf (ELY)

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The market has been en fuego since bottoming out on Christmas Eve. So far, 2019 has seen a barrage of positive days and green candles for the broad market. With stocks behaving so well, you may be tempted to jump on in and buy stocks with both hands. Before you lay down your hard-earned money, you should take a minute to investigate the earnings trend of the stock you’re looking at. Stock prices tend to track along with earnings over the long term. Avoiding stocks in negative earnings trends can save you from headaches down the road.

One stock with a negative earnings trend you may want to avoid for now is Zacks Rank #5 (Strong Sell) Callaway Golf (ELY - Free Report) . allaway Golf Company, together with its subsidiaries, designs, manufactures, and sells golf clubs, golf balls, golf bags, and other golf-related accessories in the United States and internationally. The company operates through three segments: Golf Clubs; Golf Balls; and Gear, Accessories and Other. It offers drivers, fairway woods, hybrids, irons, wedges, and putters. The company also provides packaged sets, golf gloves, golf footwear, golf apparel, travel gear, lifestyle apparel and accessories, headwear, eyewear, and practice aids. In addition, it licenses its trademarks and service marks for use on golf related accessories, such as golf apparel, footwear, golf gloves, prescription eyewear, practice aids, and OGIO branded bags. The company sells its products through golf retailers, sporting goods retailers, mass merchants, Internet retailers, department stores, field representatives, and in-house sales representatives, as well as to third-party distributors in the United States and approximately 100 countries. 

The reason for the unfavorable Zacks Rank lies in the recent negative earnings estimate revisions coming from analysts. Over the last sixty days, five analysts have cut their estimates for next year, while this year’s number has remained the same. Those negative revisions have dropped our Zacks Consensus Estimate for next year from $1.12 to $1.08. That would peg EPS growth down at 3%.

Investors looking for other stocks in the same industry should checkout Zacks Rank #2 (Buy) Acushnet (GOLF - Free Report) and Clarus (CLAR - Free Report) .

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

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Acushnet Holdings Corp. (GOLF) - free report >>

Callaway Golf Company (ELY) - free report >>

Clarus Corporation (CLAR) - free report >>

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