3 Reasons GOLF is Risky and 1 Stock to Buy Instead

Acushnet has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 5.3% to $77.63 per share while the index has gained 4.5%.

Is there a buying opportunity in Acushnet, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.

Why Is Acushnet Not Exciting?

We're sitting this one out for now. Here are three reasons why we avoid GOLF and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, Acushnet’s 8.2% annualized revenue growth over the last five years was sluggish. This was below our standard for the consumer discretionary sector.

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Acushnet’s revenue to rise by 1%, close to its 8.2% annualized growth for the past five years. This projection is underwhelming and indicates its newer products and services will not accelerate its top-line performance yet.

3. Mediocre Free Cash Flow Margin Limits Reinvestment Potential

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Acushnet has shown mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 8.9%, subpar for a consumer discretionary business.

Final Judgment

Acushnet isn’t a terrible business, but it doesn’t pass our quality test. That said, the stock currently trades at 20.9× forward P/E (or $77.63 per share). At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere. Let us point you toward the most entrenched endpoint security platform on the market.

Stocks We Would Buy Instead of Acushnet

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