Unpacking Q2 Earnings: Topgolf Callaway (NYSE:MODG) In The Context Of Other Leisure Facilities Stocks

MODG Cover Image — Unpacking Q2 Earnings: Topgolf Callaway (NYSE:MODG) In The Context Of Other Leisure Facilities Stocks

Radek Strnad

Mon, Oct 7, 2024, 1:18 AM 4 min read

Leisure facilities companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted their spending from "things" to "experiences". Leisure facilities seek to benefit but must innovate to do so because of the industry's high competition and capital intensity.

The 12 leisure facilities stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 13.8% below.

The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.

In light of this news, leisure facilities stocks have held steady with share prices up 2.3% on average since the latest earnings results.

Topgolf Callaway (NYSE:MODG)

Formed between the merger of Callaway and Topgolf, Topgolf Callaway (NYSE:MODG) sells golf equipment and operates technology-driven golf entertainment venues.

Topgolf Callaway reported revenues of $1.16 billion, down 1.9% year on year. This print fell short of analysts’ expectations by 2.8%. Overall, it was a softer quarter for the company with underwhelming earnings guidance for the full year.

"Despite macro headwinds including the cumulative impact of negative FX trends, persistently high inflation and recent softer-than-expected traffic to our Topgolf venues, I am incredibly proud of our team's ability to drive market share gains in our products business as well as the continued strengthening of the digital capabilities and fundamental venue profitability at Topgolf," commented Chip Brewer, President and Chief Executive Officer of Topgolf Callaway Brands.

Topgolf Callaway delivered the slowest revenue growth of the whole group. Unsurprisingly, the stock is down 27.1% since reporting and currently trades at $10.20.

Read our full report on Topgolf Callaway here, it’s free.

Best Q2: Life Time (NYSE:LTH)

With over 150 locations and gyms that include saunas and steam rooms, Life Time (NYSE:LTH) is an upscale fitness club emphasizing holistic well-being and fitness.

Life Time reported revenues of $667.8 million, up 18.9% year on year, outperforming analysts’ expectations by 5.2%. The business had a stunning quarter with an impressive beat of analysts’ same-store sales and earnings estimates.

Life Time pulled off the biggest analyst estimates beat and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 15.5% since reporting. It currently trades at $24.02.

Is now the time to buy Life Time? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Xponential Fitness (NYSE:XPOF)

Owner of CycleBar, Rumble, and Club Pilates, Xponential Fitness (NYSE:XPOF) is a boutique fitness brand offering diverse and specialized exercise experiences.

Xponential Fitness reported revenues of $76.52 million, down 1.1% year on year, falling short of analysts’ expectations by 8.5%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations and a miss of analysts’ earnings estimates.

Xponential Fitness delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 29.1% since the results and currently trades at $12.06.

Read our full analysis of Xponential Fitness’s results here.

Vail Resorts (NYSE:MTN)

Founded by two Aspen, Colorado ski patrol guides, Vail Resorts (NYSE:MTN) is a mountain resort company offering luxury experiences in over 30 locations across the globe.

Vail Resorts reported revenues of $265.4 million, down 1.6% year on year. This number met analysts’ expectations. Zooming out, it was a softer quarter as it logged a miss of analysts’ skier visits and earnings estimates.

The stock is down 7.3% since reporting and currently trades at $174.06.

Read our full, actionable report on Vail Resorts here, it’s free.

Cedar Fair (NYSE:FUN)

Originally a lakeside resort, Cedar Fair (NYSE:FUN) operates amusement parks and resorts, delivering thrilling experiences and family entertainment across North America.

Cedar Fair reported revenues of $1.01 billion, up 6.9% year on year. This print beat analysts’ expectations by 4.7%. More broadly, it was a mixed quarter as it also produced a decent beat of analysts’ operating margin estimates but a miss of analysts’ earnings estimates.

The stock is down 13.3% since reporting and currently trades at $37.58.

Read our full, actionable report on Cedar Fair here, it’s free.

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