$86 Price Target Set for Acushnet (GOLF)

## Summary - Due to a continued increase in golf participation, I expect Acushnet to achieve 5-6% sales growth in the medium-term and estimate, using DCF analysis, a fair value for the company's stock of $86. ## 1. Historical Performance As shown in Figure 1, Acushnet generated NOPAT (net operating profit after tax) of $258M in FY24 and FCF of $219M [1]. Its NOPAT has increased at a CAGR of 12% since FY19, driven largely by the social-media led shift in the perception of the sport, as described in my <a target="_blank" href="https://jackdry.com/search-interest-indicates-8-q2-sales-growth-for-acushnet-golf">last report</a>. <div style="width: 140%; position: relative; flex-direction: column; left: 50%; transform: translateX(-50%); max-width: calc(100vw - 2rem); margin: 20px 0px"> <span style="color: #0000EE; font-size: 0.9rem"><i>Figure 1: NOPAT, Net Investment & FCF<br> FY22 FCF distorted due to industry-wide supply chain issues.</i></span> <img src="https://s3.eu-west-2.amazonaws.com/jackdry.com/articles/2025/%2486+Price+Target+Set+for+Acushnet/fcf-plot.png" style="margin-top: 5px"> </div> As shown by Figure 2, the company's ROIC has increased by 6.3 percentage points (ppts) since FY19 to 26.6% [2], significantly higher than the average of 8.9% for US leisure companies [3]. <div style="width: 140%; position: relative; flex-direction: column; left: 50%; transform: translateX(-50%); max-width: calc(100vw - 2rem); margin: 20px 0px"> <span style="color: #0000EE; font-size: 0.9rem"><i>Figure 2: NOPAT Margin & ROIC</i></span> <img src="https://s3.eu-west-2.amazonaws.com/jackdry.com/articles/2025/%2486+Price+Target+Set+for+Acushnet/nopat-margin-roic.png" style="margin-top: 5px"> </div> ## 2. Valuation ### 2.1 Assumptions Table 1 summarizes the forecasts my valuation depends on. For the same reasons given in my <a target="_blank" href="https://jackdry.com/search-interest-indicates-8-q2-sales-growth-for-acushnet-golf">last report</a>, I expect the company's forward 12-month (FTM) sales to increase by 7%, and for growth to then adjust to 5% in the medium term, which is the CAGR forecast for the golf equipment market [4]. In addition to assuming that the company's NOPAT margin stays at its FY24 level, I also assume a marginal sales to capital ratio of 2.5. This is equal to the company's marginal sales/ capital ratio computed from FY17 to FY24, and is also close to the average of 2.6 for US companies in the recreation, specialty retail and apparel industries [5]. I lastly assume the company's weighted average cost of capital is 6.8%. I computed this assuming the pre-tax costs of capital for the company's interest-bearing debt, operating lease liabilities and equity are 7.4%, 4.6% and 8.3% respectively. <div style="width: 100%; position: relative; left: 50%; transform: translateX(-50%); max-width: calc(100vw - 2rem);"> <span style="color: #0000EE; font-size: 0.9rem"><i>Table 1: Valuation Assumptions</i></span> <table style="flex: 1; margin-top: 10px"> <thead> <tr> <th></th> <th>Years 1 – 5</th> <th>Years 5 – 10</th> <th>Terminal </th> </tr> </thead> <tbody> <tr> <td>Sales CAGR</td> <td>6% ➝ 5%</td> <td>5% ➝ 2%</td> <td>2%</td> </tr> <tr> <td>NOPAT Margin</td> <td colspan="3">10.50%</td> </tr> <tr> <td>Marginal Sales/ Capital Ratio</td> <td colspan="3">2.5</td> </tr> <tr> <td>WACC</td> <td colspan="3">6.8%</td> </tr> </tbody> </table> </div> ### 2.2 Results Table 2 shows my forecasts for the company's FCFF, and Table 3 the output of my valuation. <div style="width: 100%; position: relative; left: 50%; transform: translateX(-50%); max-width: calc(100vw - 2rem);"> <span style="color: #0000EE; font-size: 0.9rem"><i>Table 2: Projected FCFF</i></span> <table style="margin-top: 10px"> <thead> <tr> <th>Year</th> <th>Sales ($M)</th> <th>NOPAT ($M)</th> <th>Net Investment ($M)</th> <th>FCFF ($M)</th> </tr> </thead> <tbody> <tr> <td>1</td> <td>2600.1</td> <td>273</td> <td>59.8</td> <td>213.2</td> </tr> <tr> <td>2</td> <td>2749.6</td> <td>288.7</td> <td>60.5</td> <td>228.2</td> </tr> <tr> <td>3</td> <td>2900.8</td> <td>304.6</td> <td>60.9</td> <td>243.7</td> </tr> <tr> <td>4</td> <td>3053.1</td> <td>320.6</td> <td>61.1</td> <td>259.5</td> </tr> <tr> <td>5</td> <td>3205.8</td> <td>336.6</td> <td>56.4</td> <td>280.2</td> </tr> <tr> <td>6</td> <td>3346.8</td> <td>351.4</td> <td>50.9</td> <td>300.5</td> </tr> <tr> <td>7</td> <td>3474</td> <td>364.8</td> <td>44.5</td> <td>320.3</td> </tr> <tr> <td>8</td> <td>3585.2</td> <td>376.4</td> <td>37.3</td> <td>339.2</td> </tr> <tr> <td>9</td> <td>3678.4</td> <td>386.2</td> <td>29.4</td> <td>356.8</td> </tr> <tr> <td>10</td> <td>3751.9</td> <td>394</td> <td>30</td> <td>363.9</td> </tr> </tbody> </table> </div> <br> <div style="width: 100%; position: relative; left: 50%; transform: translateX(-50%); max-width: calc(100vw - 2rem);"> <span style="color: #0000EE; font-size: 0.9rem"><i>Table 3: Valuation Output</i></span> <table style="margin-top: 10px"> <tbody> <tr> <td>PV(FCFF Years 1-10)</td> <td>$2180.7M</td> </tr> <tr> <td>PV(Terminal Value)</td> <td>$4203.9M</td> </tr> <tr> <td>Value of Operations</td> <td>$6195.6M</td> </tr> <tr> <td>Debt</td> <td>$1098.9M</td> </tr> <tr> <td>Excess Cash</td> <td>$3.8M</td> </tr> <tr> <td>Noncontrolling Interests</td> <td>$4.0M</td> </tr> <tr> <td>Value of Equity</td> <td>$5092.6M</td> </tr> <tr> <td>Shares Oustanding</td> <td>59,444,080</td> </tr> <tr> <td>Value Per Share</td> <td>$85.7</td> </tr> </tbody> </table> </div> ## 3. Data <div style="width: 140%; position: relative; left: 50%; transform: translateX(-50%); max-width: calc(100vw - 2rem);"> <iframe width="140%" height="400px" style=" width: 140%; height: 600px; border: none; position: relative; left: 50%; transform: translateX(-50%); display: block; " src="https://docs.google.com/spreadsheets/d/e/2PACX-1vQYPNERTIcwBGkXPAEzt31OFu4legoQe2cI4bulZE7xBHdhg6CZT2nj1bBzX9M85k95rQWJkXcFmnFJ/pubhtml?gid=1404064607&amp;single=true&amp;widget=true&amp;headers=false"></iframe> </div> ## 4. Endnotes <ol> <li id="endnote-1">In computing NOPAT, EBITA was adjusted upwards by removing the implicit interest in operating lease expense. Non-recurring items were also excluded.</li> <li id="endnote-2">Operating lease liability was incorporated into invested capital prior to 2019 by summing the present value of future lease payments disclosed in the company's financial statements.</li> <li id="endnote-3">https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/mgnroc.html</li> <li id="endnote-4">https://www.factmr.com/report/golf-equipment-market</li> <li id="endnote-5">https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/capex.html</li> </ol>