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Is Callaway Golf (ELY) Stock Undervalued Right Now?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Callaway Golf (ELY - Free Report) is a stock many investors are watching right now. ELY is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 17.38, which compares to its industry's average of 31.03. Over the past 52 weeks, ELY's Forward P/E has been as high as 17.78 and as low as 13.15, with a median of 15.86.

We also note that ELY holds a PEG ratio of 0.70. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ELY's PEG compares to its industry's average PEG of 2.03. Over the last 12 months, ELY's PEG has been as high as 0.71 and as low as 0.53, with a median of 0.63.

We should also highlight that ELY has a P/B ratio of 2.54. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 5.18. ELY's P/B has been as high as 2.56 and as low as 1.80, with a median of 2.17, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ELY has a P/S ratio of 1.26. This compares to its industry's average P/S of 1.29.

Finally, investors should note that ELY has a P/CF ratio of 14.76. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 28.66. ELY's P/CF has been as high as 16.89 and as low as 10.43, with a median of 13.02, all within the past year.

These are only a few of the key metrics included in Callaway Golf's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ELY looks like an impressive value stock at the moment.


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