Callaway Golf (NYSE: ELY) and Escalade, (NASDAQ:ESCA) are both small-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, dividends, profitability, institutional ownership and valuation.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Callaway Golf and Escalade,, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Callaway Golf 0 4 8 0 2.67
Escalade, 0 0 1 0 3.00

Callaway Golf currently has a consensus price target of $14.89, suggesting a potential upside of 17.03%. Escalade, has a consensus price target of $17.00, suggesting a potential upside of 41.67%. Given Escalade,’s stronger consensus rating and higher possible upside, analysts plainly believe Escalade, is more favorable than Callaway Golf.

Volatility and Risk

Callaway Golf has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500. Comparatively, Escalade, has a beta of 0.06, suggesting that its share price is 94% less volatile than the S&P 500.

Earnings and Valuation

This table compares Callaway Golf and Escalade,’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Callaway Golf $965.02 million 1.24 $89.78 million $1.82 6.99
Escalade, $167.82 million 1.03 $18.37 million $0.79 15.19

Callaway Golf has higher revenue and earnings than Escalade,. Callaway Golf is trading at a lower price-to-earnings ratio than Escalade,, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Callaway Golf and Escalade,’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Callaway Golf 18.09% 6.60% 4.89%
Escalade, 6.67% 10.95% 7.32%

Insider & Institutional Ownership

86.0% of Callaway Golf shares are owned by institutional investors. Comparatively, 26.0% of Escalade, shares are owned by institutional investors. 2.6% of Callaway Golf shares are owned by insiders. Comparatively, 20.0% of Escalade, shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Callaway Golf pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. Escalade, pays an annual dividend of $0.46 per share and has a dividend yield of 3.8%. Callaway Golf pays out 2.2% of its earnings in the form of a dividend. Escalade, pays out 58.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

Callaway Golf beats Escalade, on 9 of the 16 factors compared between the two stocks.

About Callaway Golf

Callaway Golf Company designs, manufactures and sells golf clubs, golf balls, golf bags and other golf-related accessories. The Company has two segments: the golf clubs segment and golf balls segment. The golf clubs segment consists of its woods, hybrids, irons and wedges, and Odyssey putters. This segment also includes other golf-related accessories, royalties from licensing of its trademarks and service marks and sales of pre-owned golf clubs. The golf balls segment consists of Callaway Golf and Strata balls that are designed, manufactured and sold by the Company. It sells its products to retailers, directly and through its subsidiaries, and to third-party distributors. It sells pre-owned golf products through its Website, www.callawaygolfpreowned.com. In addition, it sells Callaway Golf and Odyssey products, including Toulon Design by Odyssey, directly to consumers through its Websites, www.callawaygolf.com and www.odysseygolf.com.

About Escalade,

Escalade, Incorporated (Escalade) is a manufacturer and distributor of sporting goods through its subsidiary Escalade Sports. The Company operates in Sporting Goods (Escalade Sports) segment. Escalade Sports manufactures, imports and distributes sporting goods brands in basketball goals, archery, indoor and outdoor game recreation and fitness products through sporting goods retailers, specialty dealers, key online retailers, traditional department stores and mass merchants. Escalade offers table tennis tables, residential in-ground basketball goals and in archery bows. Its brands, owned or distributed include Bear Archery, Trophy Ridge, Whisker Biscuit, Cajun Bowfishing, STIGA, Ping-Pong, Prince, Goalrilla, Goaliath, Silverback, Hoopstar, Goalsetter, Woodplay, Childlife, The STEP, USWeight, Atomic, Redline, Mizerak, Minnesota Fats, Accudart, Arachnid, Nodor, Pickleball Now, Onix and Viva Sol. Escalade Sports manufactures in the United States and Mexico, and imports product from Asia.

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