Callaway Golf (ELY) is up 7% at a nine-year high after the company reported better than expected first quarter results and raised guidance for the fiscal 2017.
Callaway reported first quarter EPS non-GAAP EPS of $0.30 on revenue of $309 million. Callaway had guided for EPS of $0.21-0.27 on revenue of $275-285 million. Callaway's second quarter forecast was above Wall Street Estimates. The company also raised fiscal 2017 non-GAAP EPS guidance to $0.31-0.37 from $0.21-0.27 and raised revenue to $960-980 million from $910-935 million.
"Sales of our new products, including the EPIC driver and new Chrome Soft X golf ball, have exceeded our expectations. Business around the globe remains very strong with all major regions reporting sales growth and market share gains. And our new business ventures, namely the apparel joint venture in Japan and the recently acquired OGIO business, are performing ahead of plan."
The EPIC 1-wood is the hottest driver on the market right now. The Chrome Soft X ball also seems to be taking market share from Titleist's Pro V1. Titleist owner Acushnet (GOLF) came public last October and will report first quarter results on March 22.
Callaway is posting impressive growth and taking share in a golf equipment business that has been stagnant for years.
The game of golf has struggled to attract millennials as it demands a lot of time and money. A round of golf can take over 5 hours on a public course and the price of clubs, balls and each round adds up pretty quickly.
Still, ELY has been steadily recovering since the recession in 2009. The stock broke out today but encountered a lot of resistance from the 2000s in the low to mid-teens.
The stock is not cheap. Callaway's enterprise value of ~$1.2 billion is ~16x EBITDA estimates for the year. Acushnet (GOLF) is breaking out today as well -- the stock trades at 8x EV/EBITDA.