Acushnet currently trades at $60.14 per share and has shown little upside over the past six months, posting a small loss of 4.8%.

Is now the time to buy Acushnet, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.

We're swiping left on Acushnet for now. Here are three reasons why you should be careful with GOLF and a stock we'd rather own.

Why Is Acushnet Not Exciting?

Producer of the acclaimed Titleist Pro V1 golf ball, Acushnet (NYSE:GOLF) is a design and manufacturing company specializing in performance-driven golf products.

1. Long-Term Revenue Growth Disappoints

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, Acushnet’s 7.9% annualized revenue growth over the last five years was sluggish. This was below our standard for the consumer discretionary sector.

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Acushnet’s revenue to rise by 2.4%, a slight deceleration versus its 4% annualized growth for the past two years. This projection doesn't excite us and implies its products and services will see some demand headwinds.

3. Mediocre Free Cash Flow Margin Limits Reinvestment Potential

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Acushnet has shown mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 9.6%, subpar for a consumer discretionary business.

Final Judgment

Acushnet isn’t a terrible business, but it doesn’t pass our bar. That said, the stock currently trades at 16.5× forward price-to-earnings (or $60.14 per share). Beauty is in the eye of the beholder, but our analysis shows the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere. We’d suggest looking at the Amazon and PayPal of Latin America.

Stocks We Would Buy Instead of Acushnet

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