Investors are bracing for the worst and waiting to see whether Callaway Golf (NYSE: ELY) will fall short of Wall Street forecasts for the third consecutive quarter. The company will unveil its latest earnings on Tuesday, July 26. Callaway Golf, together with its subsidiaries, designs, manufactures, and sells golf clubs and golf balls.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Callaway Golf, with six of 10 rating it hold. Analysts' rating of Callaway Golf has stayed constant from three months prior.
  • Revenue forecasts: On average, analysts predict $270.2 million in revenue this quarter. That would represent a decline of 11% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is a loss of $0.01 per share. Estimates range from a loss of $0.05 to a profit of $0.08.

What our community says:
CAPS All-Stars are solidly behind the stock, with 88.5% granting it an "outperform" rating. The community at large agrees with the All-Stars, with 84.1% awarding it a rating of "outperform." Fools have embraced Callaway Golf and haven't been shy with their opinions lately, logging 137 posts in the past 30 days. Despite the majority sentiment in favor of Callaway Golf, the stock has a middling CAPS rating of three out of five stars.

Revenue has fallen for the past three quarters. The company's gross margin shrank by 2 percentage points in the last quarter. Revenue fell 5.7% while cost of sales fell 2.2% to $161.9 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters. 

Quarter Q1 Q4 Q3 Q2
Gross Margin 43.3% 29.9% 27.9% 40.7%
Operating Margin 8% (22.7%) (21.6%) 8.3%
Net Margin 4.5% (17.4%) (10.4%) 3.8%
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