At US$45.13, Is Acushnet Holdings Corp. (NYSE:GOLF) Worth Looking At Closely?

Acushnet Holdings Corp. (NYSE:GOLF), is not the largest company out there, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$57.43 and falling to the lows of US$44.41. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Acushnet Holdings' current trading price of US$45.13 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Acushnet Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Acushnet Holdings

What's the opportunity in Acushnet Holdings?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Acushnet Holdings’s ratio of 14.64x is trading slightly above its industry peers’ ratio of 13.56x, which means if you buy Acushnet Holdings today, you’d be paying a relatively sensible price for it. And if you believe that Acushnet Holdings should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, it seems like Acushnet Holdings’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Acushnet Holdings?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -15% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Acushnet Holdings. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Currently, GOLF appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on GOLF, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on GOLF for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on GOLF should the price fluctuate below the industry PE ratio.

So while earnings quality is important, it's equally important to consider the risks facing Acushnet Holdings at this point in time. When we did our research, we found 3 warning signs for Acushnet Holdings (1 is a bit concerning!) that we believe deserve your full attention.

If you are no longer interested in Acushnet Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.