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Some good, some bad news for golf industry numbers
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Some good news for the golf industry for a change. Golf Datatech's September 1009 rounds played report shows an increase of 4.1 percent compared to the same month a year ago. Year-to-date, according to Datatech, rounds are up 0.5 percent - basically flat - versus the same period in 2008. The numbers represent 4,225 reporting courses.
NOW THE BAD: Rochedale Securities senior analyst Hayley Wolff, probably the most astute Wall Streeter watching Callaway Golf Company (NYSE: ELY), isn't confused by company president George Fellows' mis-direction attempts in regard's to ELY's numbers.
"ELY reported 3Q EPS in line with its preliminary release,'' Wolff wrote in her most recent report following Callaway's report of a $16 million loss in the third quarter of 2009. "Business remains sluggish owing to the weak economy and high levels of discounting that have pressured margins. Guidance for 4Q was below street expectations. We are modestly lowering our 2009E EPS to a loss of ($0.32) per share from ($0.30). We are lowering our already below-consensus 2010E EPS from $0.25 to $0.20.''
Wolff added that "while earnings should rebound in 2010 on less discounting and a reversal in FX, we expect the competitive environment to remain challenging and manufacturers continue to duke it out for a more price-sensitive, and still-wounded, consumer.''
All that said, Wolff is maintaining her 'Hold'' rating on Callaway shares.
"Eroding market shares continue to concern us despite claims to the contrary,'' Wolff wrote. "Moreover, we need to see meaningful expense reductions to address what we view is a permanent shift in the industry's profitability that dates back to 2002. Balance sheet mismanagement also gives us pause.''
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