Acushnet (GOLF)

Golf equipment and apparel company Acushnet (NYSE:GOLF) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 6% year on year to $657.7 million. The company’s full-year revenue guidance of $2.53 billion at the midpoint came in 0.6% above analysts’ estimates. Its GAAP profit of $0.81 per share was 5.1% below analysts’ consensus estimates.

Company Overview

Producer of the acclaimed Titleist Pro V1 golf ball, Acushnet (NYSE:GOLF) is a design and manufacturing company specializing in performance-driven golf products.

Leisure products cover a wide range of goods in the consumer discretionary sector. Maintaining a strong brand is key to success, and those who differentiate themselves will enjoy customer loyalty and pricing power while those who don’t may find themselves in precarious positions due to the non-essential nature of their offerings.

Competitors in the golf equipment market include Topgolf Callaway (NYSE:MODG), Mizuno (TYO:8022), Nike (NYSE:NKE), Johnson Outdoors (NASDAQ:JOUT), and private companies TaylorMade, Ping, and Srixron.

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Acushnet grew its sales at a 10.1% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Acushnet’s recent performance shows its demand has slowed as its annualized revenue growth of 2.3% over the last two years was below its five-year trend.

We can better understand the company’s revenue dynamics by analyzing its three most important segments: Titleist Balls, Titleist Clubs, and FootJoy, which are 30.8%, 34.2%, and 20.8% of revenue. Over the last two years, Acushnet’s Titleist Balls (golf balls) and Titleist Clubs (golf clubs) revenues averaged year-on-year growth of 4% and 4.9% while its FootJoy revenue (apparel) averaged 3.6% declines.

This quarter, Acushnet reported year-on-year revenue growth of 6%, and its $657.7 million of revenue exceeded Wall Street’s estimates by 3.8%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. This projection is underwhelming and implies its products and services will see some demand headwinds.

Acushnet’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 12.1% over the last two years. This profitability was higher than the broader consumer discretionary sector, showing it did a decent job managing its expenses.

In Q3, Acushnet generated an operating margin profit margin of 14.1%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Acushnet’s EPS grew at a spectacular 24.4% compounded annual growth rate over the last five years, higher than its 10.1% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

In Q3, Acushnet reported EPS of $0.81, down from $0.89 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Acushnet’s full-year EPS of $3.66 to shrink by 9.3%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Acushnet has shown weak cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 7.2%, subpar for a consumer discretionary business.

Acushnet’s free cash flow clocked in at $136.9 million in Q3, equivalent to a 20.8% margin. This cash profitability was in line with the comparable period last year and above its two-year average.

Over the next year, analysts predict Acushnet’s cash conversion will improve. Their consensus estimates imply its free cash flow margin of 4.4% for the last 12 months will increase to 10.2%, giving it more flexibility for investments, share buybacks, and dividends.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Acushnet’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 16.5%, slightly better than typical consumer discretionary business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Acushnet’s ROIC averaged 2.9 percentage point decreases each year. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Acushnet reported $89.48 million of cash and $901.7 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $413 million of EBITDA over the last 12 months, we view Acushnet’s 2.0× net-debt-to-EBITDA ratio as safe. We also see its $26.77 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We enjoyed seeing Acushnet beat analysts’ EBITDA expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its EPS missed. Overall, this print had some key positives. The stock traded up 3% to $77.63 immediately following the results.

Updated: December 4, 2025 at 10:01 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Acushnet.

We cheer for all companies serving everyday consumers, but in the case of Acushnet, we’ll be cheering from the sidelines. First off, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate over the next 12 months. On top of that, Acushnet’s projected EPS for the next year is lacking, and its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

Acushnet’s P/E ratio based on the next 12 months is 21.2x. This valuation tells us a lot of optimism is priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $78.86 on the company (compared to the current share price of $83.90), implying they don’t see much short-term potential in Acushnet.