This company, which primarily designs, manufacturers, and sells golf clubs, golf balls, and golf-related apparel, gear, and accessories by retailers and distributors, has been grouped into golf equipment sector in sport goods industry.
It seems that the demand for golf club and balls has been strong and continuingly growing in the past several years driven by new iron and wood clubs. As demand increased, companies have been able to reduce their promotion and thus increase revenue and improve the margins for most of their product line.
The typical gross margin is about 47% including depreciation, SG&A is about 33%, and operating margin is about 11% in 2018. The typical enterprise cash flow/sales ratio is 6.9%.
The typical enterprise price/EBI (adjusted with tax shield) ratio is 24.
It seems that the demand for golf club and balls of this company has been increasing gradually since 2017 as indicated by the growth in sales volume and the ability of this company to reduce promotion/raise price. The increased sales volume has been stimulated by launch of new club and balls. The acquired apparel and gear seems to be successful.
The first three months of fiscal 2018 compared with the same period of 2017 (ended March 31 2018)
Net revenue increased 30% due to increase of 7% in average selling price of wood club and increase of 12% in volume of wood club, increase of 18% in average selling price of iron club and increase of 36% in volume of iron club, and increase of 12% in golf balls price.
Fiscal 2017 compared with fiscal 2016
Net revenue increased 20% due to increase of 33% in average selling price of wood club and increase of 7% in volume of wood club and increase of 9% in golf balls sales volume offset by decrease of 15% in sales volume of iron clubs.
Fiscal 2016 compared with fiscal 2015
Net revenue increased 3.2% due to increase of 7%, 3%, 10% in average selling price of iron club, wood clubs, and balls respectively offset by decrease of 8%, 1.5%, and 3.6% in sales volume of iron club, wood club, and balls.
Its gross margin (including depreciation) was improved by about 400 basis points since 2015(to about 47%) and its SG&A as percentage of sales was improved to about 33% in 2018. And this resulted in an improved operating margin of about 11%.
Stock performance
It seems that the demand for climb and ski products of this company has been picking up since 2016 as indicated by the growth in sales volume of those products during the same period of time. It seems that the demand for climb and mountain products has been stronger than for ski products both domestically and internationally.
The first three months of fiscal 2018 compared with the same period of 2017 (ended mar 31 2018)
Organic revenue (excluding acquisition and foreign currency) increased about 4.5% due to increase of 20% in international sales volume of climb and ski products offset by decrease of 9.3% in domestic sales volume of ski products.
Fiscal 2017 compared with fiscal 2016
Organic revenue (excluding acquisition and foreign currency) increased about 7% due to increase of 6.7% in domestic sales volume of climb and ski products and increase of 7.4% in international sales volume of climb and ski products.
Fiscal 2016 compared with fiscal 2015
Organic revenue (excluding acquisition and foreign currency) increased about 0.5% due to increase of 2.3% in domestic sales volume of climb products offset by decrease of 1.7% in international sales volume of ski products.
Its gross margin (including direct operating costs and depreciation) was down from about 35% to about 32.5% primarily due to unfavorable foreign currency and the resulted decrease in sales. With the improved SG&A as percentage of sales (down to about 33% in 2018) due to costs saving effort, we have been decreased loss (operating margin down to -1% currently).
Stock performance
This company is having an enterprise price/cash flow ratio of 24. We think that its stock is being relatively undervalued compared with its strong demand for golf related equipment.
