A strong stock as of late has been Callaway Golf (CALY). Shares have been marching higher, with the stock up 30.4% over the past month. The stock hit a new 52-week high of $15.48 in the previous session. Callaway has gained 32.7% since the start of the year compared to the -0.4% gain for the Zacks Consumer Discretionary sector and the 5.4% return for the Zacks Leisure and Recreation Products industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on November 6, 2025, Callaway reported EPS of -$0.05 versus consensus estimate of -$0.21 while it beat the consensus revenue estimate by 2.67%.
For the current fiscal year, Callaway is expected to post earnings of $0.26 per share on $3.93 in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $0.24 per share on $2.08 in revenues. This represents a year-over-year change of 242.06% and -47.1%, respectively.
Valuation Metrics
While Callaway has moved to its 52-week high over the past few weeks, investors need to be asking, what is next for the company? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Callaway has a Value Score of B. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 59.5X current fiscal year EPS estimates, which is a premium to the peer industry average of 23X. On a trailing cash flow basis, the stock currently trades at 1.6X versus its peer group's average of 11.6X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this is even more important than the company's VGM Score. Fortunately, Callaway currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Callaway fits the bill. Thus, it seems as though Callaway shares could have potential in the weeks and months to come.
How Does CALY Stack Up to the Competition?
Shares of CALY have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is MASTERCRAFT BOAT HOLDINGS, INC. (MCFT). MCFT has a Zacks Rank of #1 (Strong Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. MASTERCRAFT BOAT HOLDINGS, INC. beat our consensus estimate by 75.00%, and for the current fiscal year, MCFT is expected to post earnings of $1.24 per share on revenue of $301.1 million.
Shares of MASTERCRAFT BOAT HOLDINGS, INC. have gained 14.3% over the past month, and currently trade at a forward P/E of 17.96X and a P/CF of 16.57X.
The Leisure and Recreation Products industry is in the top 30% of all the industries we have in our universe, so it looks like there are some nice tailwinds for CALY and MCFT, even beyond their own solid fundamental situation.
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Callaway Golf Company (CALY): Free Stock Analysis Report MASTERCRAFT BOAT HOLDINGS, INC. (MCFT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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