Topgolf Callaway Brands (Topgolf Callaway Brands) Predictability Rank

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What is Topgolf Callaway Brands Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Topgolf Callaway Brands Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

Topgolf Callaway Brands Predictability Rank Related Terms

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Topgolf Callaway Brands (Topgolf Callaway Brands) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Travel & Leisure » Topgolf Callaway Brands Corp (NYSE:MODG) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

CLY:Germany CLY:Germany

Address

2180 Rutherford Road, Carlsbad, CA, USA, 92008

Website

https://www.callawaygolf.com

Topgolf Callaway Brands Corp is a modern golf and active lifestyle company that provides world-class golf entertainment experiences, designs and manufactures premium golf equipment, and sells golf and active lifestyle apparel and other accessories. It operates in the below segments: Topgolf; Golf Equipment and Active Lifestyle. Some of its brands are Odyssey, OGIO, TravisMathew, and Jack Wolfskin. Its geographical segments are the United States, Europe, Japan, and the Rest of the World. Majority of the revenue is earned from United States.

Executives

Laura Jean Flanagan	director	395 OYSTER POINT BLVD, SUITE 415, SOUTH SAN FRANCISCO CA 94080
Brewer Oliver G Iii	officer: President and CEO	2180 RUTHERFORD ROAD, CARLSBAD CA 92008
Jennifer L. Thomas	officer: Chief Accounting Officer	2180 RUTHERFORD ROAD, CARLSBAD CA 92008
Erik J Anderson	director	1411 E MISSION AVE, SPOKANE WA 99202
Adebayo O. Ogunlesi	director	2180 RUTHERFORD ROAD, CARLSBAD CA 92130
C. Matthew Turney	director	2180 RUTHERFORD ROAD, CARLSBAD CA 92008
Rebecca Fine	officer: EVP, Chief People Officer	2180 RUTHERFORD ROAD, CARLSBAD CA 92008
Brian P. Lynch	officer: SVP, G.C. & Corp Secretary	2180 RUTHERFORD ROAD, CARLSBAD CA 92008
Samuel H Armacost	director	2180 RUTHERFORD ROAD, CARLSBAD CA 92008
Varsha Rajendra Rao	director	6155 EL CAMINO REAL, CARLSBAD CA 92009
Bavan Holloway	director	8501 NORTH SCOTTSDALE ROAD, SUITE 100, SCOTTSDALE AZ 85253
Pep Tg Investments Lp	10 percent owner	C/O PROVIDENCE EQUITY PARTNERS L.L.C., 50 KENNEDY PLAZA, 18TH FLOOR, PROVIDENCE RI 02903
Glenn F. Hickey	officer: EVP, Callaway Golf	2180 RUTHERFORD ROAD, CARLSBAD CA 92008
Artie Starrs	officer: CEO, Topgolf	2180 RUTHERFORD ROAD, CARLSBAD CA 92008
Westriver Management, Llc	10 percent owner	920 5TH AVENUE, SUITE 3450, SEATTLE WA 98104