“Callaway is in a better, more upscale part of the consumer market,” says Allen. “But it’s dependent on the fickle taste of the golfer for the latest club. The golf-equipment market is basically flat, and there are no major improvement trends on the horizon. It looks like that market place has seen its glory days; now it’s a slow-growth, competitive market, dependent on the next hot club.”
Back in 1998, when it appeared that golf would ride a boom propelled by Tiger Woods and retiring baby boomers, Callaway stock zoomed to almost $34. But earnings have been volatile. Ditto for the stock. This year, it has been as high as $18.20. “Historically, the $9 or $10 range has been a floor for that stock,” says Leedom. It recently bounced off that floor to above $13. But he doubts it will climb much higher.