Core Insights - Topgolf Callaway Brands Corp. (MODG) experienced significant growth in its Topgolf business during Q3 2025, with traffic increasing sharply due to new value-focused initiatives [1] Group 1: Business Performance - The core consumer segment of Topgolf, which constitutes approximately 80% of revenues, saw high-teens traffic growth, leading to positive same-venue sales for the first time in several quarters [1][8] - Targeted pricing actions, such as "Sunday Funday" and half-off golf promotions from Monday to Thursday, made Topgolf a more accessible entertainment option without harming brand integrity [2] - Venue-level EBITDA margins remained stable at just above 33%, indicating that increased traffic and better utilization compensated for lower price points [2][8] Group 2: Customer Engagement - About two-thirds of the traffic increase came from repeat visitors, suggesting strong customer engagement rather than just promotional spikes [3] - New initiatives like summer passes and the PlayMore subscription concept are contributing to sustained demand [3] Group 3: Strategic Outlook - The value strategy appears to be a structural reset rather than a temporary fix, potentially sustaining traffic if executed effectively [5] - Despite some risks, such as the underperformance of the 3-plus bay corporate events business, traffic momentum has continued into October, supported by operational upgrades like Toast POS [4] Group 4: Market Performance - MODG shares have increased by 28.5% over the past six months, contrasting with a 3% decline in the industry [6] - The Zacks Consensus Estimate for MODG's 2026 loss has narrowed over the past 60 days, indicating improved market sentiment [10] - MODG is currently trading at a forward 12-month price-to-sales ratio of 0.55, which is lower than Acushnet Holdings (0.48) and American Outdoor Brands (1.85) [11]

Group 1: Company Performance - Topgolf Callaway Brands (MODG) has returned approximately 46.7% since the start of the calendar year, significantly outperforming the average return of 2.7% for the Consumer Discretionary sector [4] - The Zacks Consensus Estimate for MODG's full-year earnings has increased by 57.6% over the past quarter, indicating improving analyst sentiment and a positive earnings outlook [3] - Topgolf Callaway Brands holds a Zacks Rank of 1 (Strong Buy), suggesting strong potential for future performance [3] Group 2: Industry Context - Topgolf Callaway Brands is part of the Leisure and Recreation Products industry, which includes 24 individual stocks and currently ranks 92 in the Zacks Industry Rank, with an average gain of 2.3% this year [5] - In contrast, Sphere Entertainment, another outperforming stock in the Consumer Discretionary sector, belongs to the Media Conglomerates industry, which ranks 187 and has declined by 0.8% year to date [6] - The Consumer Discretionary group is currently ranked 12 within the Zacks Sector Rank, which evaluates 16 different sector groups [2]

Core Insights - Two stocks with strong buy rankings and momentum characteristics are highlighted for investors: Topgolf Callaway (MODG) and California BanCorp (BCAL) [1][2]. Group 1: Topgolf Callaway (MODG) - Topgolf Callaway is a tech-enabled modern golf and active lifestyle company that provides golf equipment, apparel, and entertainment [1]. - The company has a Zacks Rank of 1 (Strong Buy) and has seen a 59% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1]. - Topgolf Callaway's shares have gained 19% over the last three months, outperforming the S&P 500, which gained 4.6% during the same period [2]. - The company possesses a Momentum Score of A [2]. Group 2: California BanCorp (BCAL) - California BanCorp is a registered bank holding company that offers a variety of financial products and services to individuals, professionals, and small to medium-sized businesses [2]. - The company also has a Zacks Rank of 1 and has experienced a 6.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2][3]. - California BanCorp's shares have increased by 15.1% over the last three months, again outperforming the S&P 500's 4.6% gain [3]. - The company has a Momentum Score of B [3].

Core Viewpoint - The article emphasizes the effectiveness of value investing as a strategy that consistently performs well across various market conditions, highlighting the importance of fundamental analysis and valuation metrics to identify undervalued stocks. Group 1: Value Investing Strategy - Value investing is a popular stock market trend that focuses on identifying stocks believed to be undervalued by the market using fundamental analysis and traditional valuation metrics [2] - The Zacks Rank system is designed to find winning stocks by focusing on earnings estimates and revisions, while also considering trends in value, growth, and momentum [1] Group 2: TOPGOLF CALLAWAY (MODG) - TOPGOLF CALLAWAY (MODG) is highlighted as a strong candidate for value investors, currently holding a Zacks Rank of 1 (Strong Buy) and a Value grade of A [3] - MODG has a price-to-sales (P/S) ratio of 0.55, which is lower than the industry average P/S ratio of 0.84, indicating potential undervaluation [4] - The combination of MODG's strong earnings outlook and favorable valuation metrics positions it as one of the market's strongest value stocks [5]

Core Insights - Topgolf Callaway Brands (MODG) shareholders have experienced a prolonged period of underperformance, likened to being "stuck in a sand trap" [1] Company Overview - Topgolf Callaway Brands operates in the sports and entertainment sector, focusing on golf-related experiences and products [1] Market Positioning - The company is positioned within a competitive landscape, where market pricing may not fully reflect its potential [2] Investment Perspective - The analysis emphasizes the importance of identifying quality companies and uncovering investment opportunities that align with market trends [2]

Group 1 - The conference call is proprietary and not open to media participation [1] - Attendees are reminded that recording or disclosing any part of the call is prohibited without written permission from Jefferies [2]

Group 1: Topgolf Callaway Brands Corp. (MODG) - Topgolf Callaway Brands Corp. is engaged in the golf equipment, golf apparel, and accessories market [1] - The company has a Zacks Rank of 1, indicating strong performance potential [1] - The Zacks Consensus Estimate for its current year earnings has increased nearly 59% over the last 60 days [1] - Topgolf Callaway's shares have gained 33.1% over the last three months, significantly outperforming the S&P 500's advance of 5.8% [1] - The company possesses a Momentum Score of B, reflecting its strong momentum characteristics [1] Group 2: Kennametal Inc. (KMT) - Kennametal Inc. specializes in tungsten carbides, ceramics, and super-hard materials for metal cutting and extreme wear applications [2] - The company also holds a Zacks Rank of 1, indicating strong performance potential [2] - The Zacks Consensus Estimate for its current year earnings has increased by 25% over the last 60 days [2] - Kennametal's shares have gained 29% over the last three months, also outperforming the S&P 500's advance of 5.8% [2] - The company has a Momentum Score of B, indicating strong momentum characteristics [2]

Core Insights - Five stocks have been added to the Zacks Rank 1 (Strong Buy) List, indicating strong potential for investment returns Group 1: Company Earnings Estimates - Norwood Financial Corp. (NWFL) has seen a 16.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Kennametal Inc. (KMT) has experienced a 25% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Topgolf Callaway Brands Corp. (MODG) has seen a nearly 59% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Interface, Inc. (TILE) has experienced an 8.8% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Universal Health Services, Inc. (UHS) has seen a 6.7% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3]

Core Viewpoint - Topgolf Callaway Brands (MODG) has received a Zacks Rank 1 (Strong Buy) upgrade, indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based solely on a company's changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2]. - The Zacks rating upgrade reflects an optimistic earnings outlook for Topgolf Callaway, which could lead to increased buying pressure and a rise in stock price [4][6]. Impact of Earnings Estimate Revisions - Changes in future earnings potential, as indicated by earnings estimate revisions, are strongly correlated with near-term stock price movements [5][7]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, influencing their buying and selling actions, which subsequently affects stock prices [5]. Company Performance and Analyst Sentiment - Topgolf Callaway is projected to earn -$0.16 per share for the fiscal year ending December 2025, with no year-over-year change expected [9]. - Over the past three months, the Zacks Consensus Estimate for Topgolf Callaway has increased by 57.6%, indicating a positive trend in analyst sentiment [9]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [8]. - The upgrade of Topgolf Callaway to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10][11].

Core Viewpoint - Topgolf Callaway Brands (MODG) has experienced significant stock performance, with an 18.1% increase over the past month and a 48.7% rise since the beginning of the year, outperforming both the Zacks Consumer Discretionary sector and the Zacks Leisure and Recreation Products industry [1][2]. Financial Performance - The company has consistently exceeded earnings expectations, reporting an EPS of -$0.05 against a consensus estimate of -$0.21 in its latest earnings report [2]. - For the current fiscal year, Topgolf Callaway is projected to have an EPS of -$0.16 on revenues of $3.93 billion, reflecting a -169.57% change in EPS and a -7.3% change in revenues [3]. - The next fiscal year forecasts an EPS of -$0.24 on revenues of $3.92 billion, indicating a year-over-year change of -49.11% in EPS and -0.21% in revenues [3]. Valuation Metrics - Despite reaching a 52-week high, the valuation metrics are crucial for assessing potential future performance and whether a pullback is likely [4]. - The Zacks Style Scores indicate that Topgolf Callaway has a Value Score of A, with Growth and Momentum Scores of B and A, respectively, resulting in a combined VGM Score of A [5][6]. Zacks Rank - The stock holds a Zacks Rank of 2 (Buy), driven by rising earnings estimates, which suggests that it meets the criteria for potential further gains [7].