Is Callaway Golf stock a buy right now?

Callaway is a golf equipment, gear and apparel company.

Kelly said the company has “attractively repositioned itself with a more streamlined operating focus and cleaner balance sheet,” but described 2026 guidance as underwhelming, particularly around cost savings and leverage. While maintaining a positive view on valuation and potential tariff reversal optionality, he removed the stock as a top idea for 2026.

Fourth-quarter 2025 revenue of $367.5-million exceeded Kelly’s $355.6-million estimate, driven by strength in Apparel, Gear and Other, while Golf Equipment revenue declined about 5% in a seasonally slower period. Adjusted EBITDA was a loss of $25.1-million.

For 2026, management guided to revenue of $1.98-billion to $2.05-billion and Adjusted EBITDA of $170-million to $195-million, incorporating an estimated $40-million incremental tariff impact, or $75-million gross. First-quarter guidance calls for revenue of $625-million to $665-million and EBITDA of $110-million to $125-million, with more than half of the tariff impact expected in Q1.

Kelly lowered his 2026 forecasts to revenue of $2,012.4-million and Adjusted EBITDA of $186.5-million, down sharply from prior estimates that included divested operations. He now expects EBITDA to decline year-over-year in 2026 due to tariffs, product launch timing and the company’s exit from lower-margin categories. For fiscal 2027, he projects revenue of $2,041.9-million and Adjusted EBITDA of $200.2-million, reflecting low-single-digit growth and roughly 50 basis points of margin expansion.

Kelly noted that despite tariff pressures, management expects gross margins to remain relatively stable through pricing actions, supplier renegotiations and SKU optimization. He expressed disappointment with limited G&A savings in guidance and sees greater potential for capital returns given Callaway’s $200-million net cash position and $200-million buyback authorization.

His $16.00 target is based on 12.5x 2027E EBITDA and incorporates $200-million in net cash and a $248-million valuation for Callaway’s remaining 40% stake in Topgolf. Kelly said shares, trading at approximately 10.4x 2026E EBITDA, represent a meaningful discount to peers and offer upside should tariff pressures ease.

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