Acushnet Holdings Corp. (GOLF): A Bull Case Theory

We came across a bullish thesis on Acushnet Holdings Corp. on Valueinvesting subreddit by jdyr1729. In this article, we will summarize the bulls’ thesis on GOLF. Acushnet Holdings Corp.'s share was trading at $81.41 as of July 29^th. GOLF’s trailing and forward P/E were 22.44 and 23.87, respectively according to Yahoo Finance.

Acushnet Holdings Corp. is positioned to benefit from a structural increase in golf participation, with medium-term sales expected to grow 5–6% annually, supported by a strong brand portfolio and a favorable market backdrop. The company delivered FY24 NOPAT of $258M and free cash flow of $219M, with NOPAT compounding at 12% annually since FY19 as golf’s perception improved post-pandemic. Acushnet’s capital efficiency has also improved materially, with ROIC rising 6.3% over five years to 26.6%, well above the 8.9% U.S. leisure industry average, reflecting disciplined investment and a capital-light model.

Management’s growth outlook assumes sustained momentum in the global golf equipment market, with forecasted sales CAGR moderating from 6% in the near term to 5% in the medium term and 2% in the terminal period. Margins are expected to remain at the FY24 level, supported by stable operating performance and a historical marginal sales-to-capital ratio of 2.5. Using a 6.8% weighted average cost of capital, a DCF-based valuation yields a per-share equity value of approximately $86, implying upside to the current trading range.

The company’s strong free cash flow generation underpins financial flexibility, while high returns on invested capital suggest resilience even in a moderating growth environment. With industry dynamics favoring sustained participation gains and the company’s fundamentals already de-risked, Acushnet offers investors a compelling combination of steady organic growth, superior capital efficiency, and undervaluation, positioning the stock for attractive risk-adjusted returns in the medium term.

Previously we covered a bullish thesis on Topgolf Callaway Brands Corp. (MODG) by Strategic Alpha in September 2024, which highlighted the turnaround potential from segment restructuring and undervaluation. The company’s stock price has depreciated approximately by 10% since our coverage as catalysts have yet to play out. The thesis still stands, with jdyr1729 sharing a similar view on the golf industry but emphasizing Acushnet’s stronger capital efficiency and sustained growth.

Acushnet Holdings Corp. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held GOLF at the end of the first quarter which was 19 in the previous quarter. While we acknowledge the potential of GOLF as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.