Callaway Golf Co’s ELY reported strong earnings after the close Tuesday and raised guidance on strong demand for golf equipment, as well as strong growth of its Top Golf business line.
Top Golf is an interactive driving range experience that allows guests to enjoy food, beer and music while they hit golf balls and compete against their friends.
Callaway’s stock closed below $18 on Tuesday before jumping on the earnings print and is now trading above $20.60 a share, good for about a 14% increase.
Callaway’s adjusted EPS came in at 36 cents a share versus 24 cents consensus estimates, while sales came in at around $1.04 billion versus a $1.02 billion estimate.
Why It Matters: The COVID-19 pandemic provided a tailwind for many industries: telecommunications, retail trading and video games to name a few. Another sector that saw a significant tailwind from the pandemic was golf and outdoor sports as a whole.
According to Golf Digest, more than 500,000 new golfers hit the course in 2020, the largest net increase in nearly 20 years. Golf Digest also said that more youth golfers joined the sport in 2020 than any year since Tiger Woods’ 1997 Master’s win.
Despite this, Callaway’s stock is trading lower than it was pre-COVID. If demand for golf equipment remains high, Callaway and other golf stocks could be a good area to look at while other sectors struggle.
Other golf stocks like Acushnet Holdings Co GOLF and Nike Inc NKE are also trading higher today.
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