jdry1729
Hi all,
As a keen golfer, I've been following Acushnet ($GOLF), owner of the Titleist and Footjoy brands, for a while. And by looking at publicly available data, it's clear that golf as a whole is having a very strong summer in terms of participation/ spend, particularly in Europe and the US.
E.g., search interest for the keywords "Titleist" and "Footjoy" was up over 25% YoY in calendar Q2 across Europe, and over 10% in the US. And the number of downloads of GHIN and MyEG – the official apps in the US and UK for submitting scores through the World Handicap System – has also increased YoY by 29% and 20% respectively.
Based on this, and also accounting for the weaker trends we're seeing across Asia, I expect Acushnet to be able to sustain YoY sales growth of at least 5-6% in the medium term. And if you also assume that the company's NOPAT (net operating profit after tax) margin and marginal sales/ capital ratio remain at 10.5% and 2.5x [1] respectively going forward, and also that its weighted-average cost of capital is 6.8% [2], then a fair value for the stock may be estimated at $86 per share.
My full analysis is available here, but the screenshot below show my forecasts of NOPAT/ FCF for the next 10 years, and how I've arrived at $86 per share. For context, Acushnet's sales and NOPAT in FY24 were $2.5B and $258M respectively.
