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

We came across a bullish thesis on Topgolf Callaway Brands Corp. on Valueinvestorsclub.com by GoBills42. In this article, we will summarize the bulls’ thesis on MODG. Topgolf Callaway Brands Corp.’s share was trading at $9.30 as of October 15th. MODG’s trailing and forward P/E were 98.91 and 156.25 respectively according to Yahoo Finance.

TopGolf Callaway is preparing to separate its TopGolf Entertainment business from its core golf club, apparel, and TopTracer operations, with the spin-off or potential sale now expected in 2026 following CEO Artie Starrs’ departure to Harley-Davidson. While TopGolf underperformance has masked the strong fundamentals of Callaway’s remain‑co, the company’s golf clubs, premium apparel—including TravisMathew—and TopTracer technology form a high-quality, profitable business.

Callaway trades at roughly 5× 2027 EPS and 1.2× EV/Sales, offering significant upside versus peers such as TaylorMade and Titleist. Catalysts include an impending COVID-era club replacement cycle, rising golf participation, accretive proceeds from the Jack Wolfskin sale, and underappreciated subscription revenue from TopTracer, which now covers 24,000 bays globally. TopTracer’s recurring high-margin revenue, combined with pricing power, could deliver a 15% uplift to EBIT, yet remains overlooked by the market.

Callaway’s golf macro tailwinds are compelling: total annual rounds have grown steadily, female and junior participation has expanded significantly, and latent demand from new golfers supports sustained club and equipment sales. Replacement cycles for drivers, irons, and wedges position Callaway to capture premium spending, particularly among consumers transitioning from entry-level to high-end clubs. Despite recent inventory glut and promotional intensity across all major brands, Callaway maintains favorable product placement, broad retail coverage, and strong brand recognition.

The Jack Wolfskin sale reduces leverage and strengthens the balance sheet, enhancing financial flexibility. Even with zero assumed equity value for TopGolf, the remain‑co appears attractively valued with a projected 2027 EPS of $1.57 and multiple scenarios suggesting 70%–160% upside. Risks include elevated inventory, promotional pressure, management and board execution concerns, and potential delays or failures in the TopGolf separation. Nonetheless, the standalone Callaway business, with high-margin clubs, apparel, and TopTracer, offers a compelling investment opportunity supported by both operational growth and strategic optionality.

Previously we covered a bullish thesis on TopGolf Callaway Brands Corp. (MODG) by Strategic Alpha in September 2024, which highlighted the undervalued core golf equipment business, Active Lifestyle challenges, and potential upside from a TopGolf spin-off. The company’s stock price has depreciated approximately by 13% since our coverage. The thesis still stands as MODG’s remain‑co is profitable. GoBills42 shares a similar perspective but emphasizes TopTracer’s high-margin recurring revenue and a more defined spin-off timeline.

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Disclosure: None.