Topgolf Callaway Brands Corp. (MODG): A Bull Case Theory

We came across a bullish thesis on Topgolf Callaway Brands Corp. on The Lion’s Roar – Outside the Box Investments’s Substack by Dominick D’Angelo. In this article, we will summarize the bulls’ thesis on MODG. Topgolf Callaway Brands Corp.’s share was trading at $9.12 as of September 4^th. MODG’s trailing and forward P/E were 98.91 and 156.25 respectively according to Yahoo Finance.

Callaway’s upcoming spin-off of its TopGolf Entertainment business creates a compelling investment opportunity in the remain‑co, comprising premium golf clubs, active-lifestyle apparel, and the TopTracer platform. Despite repeated delays in the TopGolf separation, the core golf business benefits from a combination of COVID-era demand tailwinds, an impending club replacement cycle, and rising golf participation, particularly among women and juniors, which has expanded the addressable market. The remain‑co trades at approximately 5× 2027 EPS of $1.57 and 1.2× EV/Sales, materially below peers like TaylorMade and Titleist, implying substantial upside.

TopTracer, a gamified ball-tracking technology installed in over 24,000 bays, represents an underappreciated, high-margin recurring revenue stream, with opportunities for incremental sign-ups and pricing power likely to drive a 15% EBIT uplift. The recent Jack Wolfskin sale for $290 m immediately de-leverages the balance sheet, enhancing financial flexibility and freeing cash for debt reduction or reinvestment. Operationally, Callaway’s core brands, including TravisMathew, Ogio, and Callaway apparel, maintain strong market positioning and premium perception, with retail observations confirming dominant placement and solid consumer demand, despite temporary inventory glut and promotional intensity.

Risks include elevated retailer inventories, historical missteps in acquisitions and TopGolf expansion, and potential delays in the spin-off. Nonetheless, the remain‑co’s earnings power and free cash flow remain compelling, with multiple catalysts—including the impending TopGolf separation, macro golf tailwinds, and under-monetized TopTracer revenue—offering potential upside of 70%–125% over the next two to three years. Even absent a spin-off, Callaway’s core business delivers attractive value, a clean deleveraging path, and significant upside optionality, positioning it as an underrecognized play in the golf and active-lifestyle sectors.

Previously we covered a bullish thesis on Topgolf Callaway Brands Corp. (MODG) by Strategic Alpha in September 2024, which highlighted the potential upside from separating its TopGolf business and the strong performance of its golf equipment and apparel segments. The company’s stock price has depreciated approximately by 15% since our coverage due to delays in strategic actions. Dominick D’Angelo shares a similar perspective but emphasizes TopTracer’s growth, macro golf tailwinds, and balance sheet deleveraging as additional catalysts for upside.

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Disclosure: None.