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Topgolf Callaway (MODG) Surges 8.8%: Is This an Indication of Further Gains?

Topgolf Callaway Brands (MODG) shares soared 8.8% in the last trading session to close at $15.66. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 1.4% loss over the past four weeks.

Topgolf Callaway Brands scored a strong price increase after the company’s recent announcement in response to the meadia reports surrounding potential sale of its California-based Callaway Golf business. The company said that it was unaware of any such discussions.

The company stated, "While it is our long-standing practice not to respond to market rumors and speculation, in light of today's unusual market activity, coupled with a recent media report originating in Korea regarding discussions of a potential sale of the Company or its golf equipment business, we confirm that we are not aware of any such discussions. We do not intend to comment further on this topic, and we assume no obligation to make any further announcement or disclosure should circumstances change."

This maker of golf equipment and accessories is expected to post break-even quarterly earnings per share in its upcoming report, which represents a year-over-year change of -100%. Revenues are expected to be $1.15 billion, down 1.5% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

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For Topgolf Callaway, the consensus EPS estimate for the quarter has been revised 162.5% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on MODG going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Topgolf Callaway belongs to the Zacks Leisure and Recreation Products industry. Another stock from the same industry, Brunswick (BC), closed the last trading session 3.3% higher at $92.13. Over the past month, BC has returned 2.3%.

For Brunswick , the consensus EPS estimate for the upcoming report has changed +0.5% over the past month to $1.34. This represents a change of -47.9% from what the company reported a year ago. Brunswick currently has a Zacks Rank of #4 (Sell).

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