Callaway Golf (ELY) Down to Strong Sell on Soft Q4, Fx Woes - Analyst Blog
On Mar 6, Zacks Investment Research downgraded Callaway Golf Co. ELY to a Zacks Rank #5 (Strong Sell) as estimates have been going down since the company reported lower-than-expected fourth-quarter 2014 results on Jan 29.
Why the Downgrade?
Although Callaway’s fourth-quarter top line and bottom line improved year over year, it missed management expectations. Fourth-quarter loss of 55 cents was wider than the Zacks Consensus Estimate of a loss of 54 cents. Sales of $134.6 million also missed the Zacks Consensus Estimate of $139.0 million by 3.2%. An unusually cold weather hurt results in the quarter.
Analysts are concerned about the unfavorable foreign exchange headwinds that are affecting Callaway’s top line sine more than 50% of the company operations are based outside U.S.
Almost all the estimates for first-quarter 2015 were revised lower over the last 60 days and as a result the Zacks Consensus Estimate slid 28.2% to 28 cents.
Full-Year 2015 Guidance Lowered
Callaway lowered the 2015 guidance during the fourth-quarter 2014 earnings conference call. It expects significant foreign currency headwinds during the 2015. Earnings per share are projected to grow approximately 40% to 90% year over year instead of 100% expected previously. The company expects sales growth of 1–4% as against 2–3%.
Stocks to Consider
Investors interested in the leisure & recreation services sector may consider stocks like Black Diamond Inc. BDE, Pool Corp. POOL and Smith & Wesson Holding Corp. SWHC. All these stocks carry a Zacks Rank #2 (Buy).
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CALLAWAY GOLF (ELY): Free Stock Analysis Report
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SMITH & WESSON (SWHC): Free Stock Analysis Report
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