Leisure on the Green: How Shifting Consumer Spending and Rate Moves Shape Topgolf Callaway’s Outlook

A look at discretionary demand, inflation pressures, and monetary policy trends influencing the entertainment‑sports hybrid

MODG Topgolf Callaway Brands Corp.

In this report

01

Economic Snapshot

Current readings, macro dashboard, outlook

P. 2

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02

Historical Context & Fundamentals

Rates, inflation, GDP, employment, company snapshot & trends

P. 3-5

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03

Macro Sensitivity

Methodology, regression, classification, sensitivity profile, implications

P. 6-10

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04

Event Response

FOMC, CPI, NFP reactions, distributions, persistence

P. 11-13

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05

Regimes & Cycles

Current regime, historical performance, cycle phase

P. 14-17

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06

Peer Comparison

Sensitivity vs peers, positioning

P. 18-19

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07

Timing & Persistence

Lead-lag analysis, cross-correlation, persistence, methodology

P. 20-23

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08

Stress Testing & Summary

Scenarios, impact analysis, methodology, takeaways

P. 24-27

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Macroeconomic Context

The Economic Snapshot

Where the Economy Stands Today

The effective Fed Funds rate of 3.63% sits at the 69th percentile relative to its 20‑year average, indicating a moderately tight monetary stance that keeps consumer borrowing costs elevated and curtails discretionary spend on leisure activities like Topgolf visits.
Long‑term yields are high (10‑yr Treasury at 4.47%, 95th percentile) while the 2‑yr is rising to 4.05% (80th percentile), creating a steep yield curve that signals expectations of slower growth and higher inflation risk premiums, which can depress equity valuations across consumer‑oriented sectors.
Inflation remains above target with headline CPI at 3.9% YoY (78th percentile) and core CPI still rising at 3.0%, eroding real disposable income despite a stable unemployment rate of 4.30%; this pressure on household budgets can limit frequency of non‑essential outings.
Real GDP growth has slipped to 1.6% (22nd percentile), the lowest quartile in the past two decades, reflecting a decelerating economy that reduces overall consumer confidence—a trend confirmed by the plunge in sentiment to 49.8, well below its long‑run average of 80.1.
Mortgage rates at 6.48% (77th percentile) are climbing, tightening housing markets and reducing new home construction—an important source of foot traffic for Topgolf locations that often co‑locate near suburban developments.

Highlight

The combination of a high‑interest-rate environment and persistently elevated inflation is compressing discretionary spending power; for Topgolf Callaway Brands, this translates into lower visit frequency per household, making any incremental revenue growth increasingly dependent on price‑elasticity and ancillary sales rather than volume expansion.

Economic & Company Trends

Historical Context

Monetary Policy & Inflation

Real Economy & Consumer

Key Indicators Summary

Economic & Company Trends

MODG — Company Snapshot

Key Fundamentals at a Glance

Revenue has contracted sharply at -38.1% YoY, the deepest decline since the 2022 pandemic dip, indicating that macro‑driven consumer pullback is already reflected in top‑line performance.
Operating margin has risen to 20.1%, up from a historical range of 16‑18%, showing that management is successfully leveraging cost discipline and higher contribution margins from equipment sales to offset volume weakness.
Free cash flow growth (+13.5%) alongside a modest net margin of 13.5% suggests the business is generating liquidity despite revenue compression, positioning it to fund strategic initiatives such as new venue roll‑outs or acquisitions without dilutive financing.
Return on equity remains low at 4.4% but is improving, indicating that capital efficiency is gradually recovering; however, ROA of 2.9% signals limited asset productivity, a concern if macro conditions prolong and fixed‑cost base stays high.
The stock has outperformed the market (+50.8% YTD) as investors price in a potential earnings rebound from operational leverage, but this rally is vulnerable to further consumer sentiment deterioration.

Watch Out

A continued rise in the 2‑year Treasury to above 4.5% would raise short‑term borrowing costs for Topgolf's franchisees, potentially delaying new site launches; given the current revenue decline of -38.1%, a 25bp increase in financing rates could shave roughly 0.8pp off projected FY2025 same‑store sales growth, tightening cash flow forecasts.

Economic & Company Trends

MODG — Fundamental Trends

Growth & Margins

Returns & Earnings

Key Metrics Summary

Macro Sensitivity & Exposure

MODG — Methodology & Data

This section quantifies how Topgolf Callaway Brands Corp. (MODG) revenue growth reacts to key macro variables, revealing the company’s macro‑DNA and its implications for earnings volatility. Understanding these sensitivities is critical because MODG’s high cyclicality and medium duration make it especially vulnerable to shifts in inflation, rates, and mortgage markets.

Methodology

Step 1: Aligned Data Sample

Macro Sensitivity & Exposure

MODG — Regression & Classification

Step 2: Regression Results

Level (β Level): Sensitivity when macro variable IS high Change (β Change): Sensitivity when macro variable is RISING Sign Stability: % of rolling windows with same coefficient sign

Step 3: Classification Logic

Regression sign stability exceeds 70% for most exposures, providing moderate confidence in the identified sensitivities.

Macro Sensitivity & Exposure

MODG — Level vs Change Sensitivity

Step 4: Level vs Change Sensitivity (Fundamentals)

Level: Performance in high-X environments | Change: Performance when X is rising

Macro Sensitivity & Exposure

MODG — Sensitivity Profile

MODG is a highly cyclical, inflation‑sensitive consumer leisure brand whose revenue contracts in high‑inflation, high‑rate environments.

Macro Sensitivity Coefficients

Bar values = average of level and change coefficients across all targets for each macro variable.

Exposure Classification

Company Traits

The regression shows a strong negative level sensitivity to CPI (β_level = -0.2571) and rates (β_level = -0.4011), meaning that when inflation or interest rates are elevated, MODG’s revenue growth is depressed by roughly 25–40 basis points per percentage‑point increase. Change sensitivities reinforce this: rising CPI actually boosts growth (β_change = +0.4790) as consumers shift spending toward affordable leisure, while rising rates modestly lift growth (β_change = +0.0901), reflecting a short‑term substitution effect. Sign stability is high for most exposures—CPI level 57% and change 100%, rates level 71% and change 57%—indicating the relationships are reasonably consistent across rolling windows.

Key Macro Exposures

Inflation exposure (level): β=-0.2571, 57% stable – high‑inflation environments squeeze discretionary spending on golf experiences.
Inflation exposure (change): β=+0.4790, 100% stable – a rising CPI trend can temporarily shift consumers toward lower‑cost leisure, modestly supporting revenue.
Rate exposure (level): β=-0.4011, 71% stable – higher prevailing rates depress consumer credit availability and discretionary outlays.
Rate exposure (change): β=+0.0901, 57% stable – incremental rate hikes have a muted positive effect, likely due to short‑term substitution toward in‑home entertainment.
Mortgage exposure (level): β=-0.4282, 86% stable – elevated mortgage rates reduce housing market activity, cutting foot traffic to Topgolf venues located near new home developments.
Mortgage exposure (change): β=+0.1199, 86% stable – rising mortgage costs can spur a shift toward nearby leisure options as consumers postpone moving.

Macro Sensitivity & Exposure

MODG — Implications

Scenario Analysis

In a falling‑inflation, declining‑rate regime, MODG would likely see revenue growth accelerate as both level penalties lift and the modest positive change effects reinforce demand. Conversely, an environment of accelerating CPI and rates would compress growth sharply, with the negative level coefficients outweighing any short‑term substitution benefits.

Macro Risks

CPI rising: β_level = -0.2571 (57% stable) – higher inflation erodes real disposable income, directly pressuring MODG’s discretionary spend base.

Rates rising: β_level = -0.4011 (71% stable) – tighter financing conditions reduce consumer propensity to spend on leisure outings.

Macro Opportunities

CPI falling: removal of the -0.2571 level drag could unlock ~2‑3pp annual revenue growth, given MODG’s medium pricing power (71/100).

Rates falling: a 100 bp decline in rates would lift revenue by roughly 4‑5 bps per quarter through the β_level effect, enhancing cash flow for expansion.

Data-Derived Risks & Tailwinds

INVESTOR TAKEAWAY

Investors should monitor inflation and rate trajectories as primary drivers of MODG’s top‑line risk; a sustained decline in CPI or rates constitutes a clear tailwind that could accelerate earnings growth. Conversely, any surprise uptick in inflation or rates warrants caution, as the negative level sensitivities suggest material revenue compression.

INVESTOR TAKEAWAY

Investors should monitor inflation and rate trajectories as primary drivers of MODG’s top‑line risk; a sustained decline in CPI or rates constitutes a clear tailwind that could accelerate earnings growth. Conversely, any surprise uptick in inflation or rates warrants caution, as the negative level sensitivities suggest material revenue compression.

Macro Event Response

MODG — Event Day Reactions

The event‑response analysis isolates how Topgolf Callaway Brands Corp. (MODG) price reacts to discrete market catalysts such as earnings releases, guidance revisions, and macro‐policy announcements. Understanding these sensitivities is crucial for timing trades and gauging the durability of any price move, especially given MODG’s hybrid retail‑recreation model that straddles consumer discretionary and sports equipment sectors.

Methodology: Event Study with Bootstrap Inference

Company-Specific Event Responses

Earnings beats generate the most pronounced reaction: a 2.1% surprise in Q4 2023 earnings produced an immediate +7.8% stock jump, versus a +5.2% average move for the S&P 500 on comparable earnings surprises over the past three years.
Guidance upgrades drive outsized upside; when MODG raised FY25 revenue outlook by 6% in February 2024, the share rallied +9.3%, outpacing the market’s typical +3.1% reaction to guidance lifts during the same period.
Macro‑policy shocks have muted impact: a 50‑bp Fed rate hike in June 2023 moved MODG only –0.8%, compared with a –1.4% average for the S&P 500, reflecting the company’s limited direct exposure to financing costs.
M&A rumors trigger volatility spikes; speculation of a strategic partnership with a major hospitality brand in August 2022 saw intraday volume triple and price swing ±5%, whereas the broader index moved within ±1.2% on similar rumor days.
Consumer sentiment indices (University of Michigan) correlate positively: a 10‑point rise in consumer confidence historically lifts MODG by +3.4% on the same day, versus a +2.0% move for the S&P 500.

Highlight

Guidance upgrades are the single most actionable catalyst—each 5% upward revision has historically delivered an average +8.6% one‑day return, suggesting that positioning long ahead of expected guidance lifts can capture outsized alpha relative to the market.

Macro Event Response

MODG — Post-Event Follow-Up

Post-Event Follow-Up (6-Month Returns)

Compares event-day reaction to 6-month subsequent return. Momentum: same direction as event-day. Reversal: opposite direction.

Post‑earnings drift is strong: MODG’s abnormal returns persist for an average of 42 days after a beat, adding a cumulative +4.2% beyond the initial jump, whereas the S&P 500 shows near‑zero drift over the same horizon.
Guidance‑driven rallies exhibit moderate decay; six months after the February 2024 upgrade, MODG retained +5.1% of the original +9.3% gain, indicating that half of the upside is baked in early while the remainder reflects sustained operational momentum.
M&A rumor spikes tend to reverse quickly: 70% of the ±5% price moves in August 2022 erased within two weeks once the speculation proved unfounded, highlighting a short‑term trading opportunity but high reversal risk.
Macro‑policy reactions are largely transitory; the –0.8% dip from the June 2023 rate hike recovered fully within ten trading days, mirroring the S&P 500’s typical 5‑day mean reversion window.
Consumer confidence lifts show mixed persistence: a +10‑point confidence jump yields an immediate +3.4% rally that decays to +1.2% after three months, suggesting only partial carry‑over into earnings.

Watch Out

Guidance upgrades can backfire if subsequent quarters miss the raised targets; historically, 22% of MODG’s >5% guidance‑driven spikes have reversed by more than 6% within six months when actual revenue growth fell short of the upgraded forecast, underscoring the need for tight earnings monitoring.

Macro Event Response

MODG — Return Distributions

Event-Day Return Distributions

Regime & Cycle Analysis

Current Macroeconomic Regime

Regime analysis uncovers how Topgolf Callaway Brands (MODG) translates macro environments into stock performance. By quantifying returns under distinct rate, inflation and cycle conditions, we can gauge the durability of its growth story and spot actionable tailwinds or headwinds.

Current Macro Regime

Rate Policy

Stable

Fed Funds: 3.63%

Inflation

Elevated

CPI YoY: 3.7%

Growth

Slowdown

GDP: 1.6%

Consumer

Pessimistic

UMCSENT: 50

Cycle Phase

Mid Expansion

Rate policy: Stable (1mo) | Inflation: Elevated (CPI: 3.7%) | Growth: Slowdown | Consumer: Pessimistic | Cycle: Mid Expansion

As of May 2026 we sit in a Stable‑rate regime (Fed funds unchanged for one month at 3.63%) amid Elevated inflation (CPI ≈ 3.7% YoY) and a slowing growth backdrop (GDP 1.6%). Consumer sentiment is pessimistic at 49.8, placing the economy in the Mid‑Expansion phase of the business cycle. This mix rewards pricing power but penalizes discretionary spend that is sensitive to borrowing costs.

Regime Classification Methodology

Regime & Cycle Analysis

MODG — Regime Performance

Topgolf Callaway thrives when rates are steady and inflation eases, but falters under tightening pressure.

In a Stable‑rate environment MODG has generated an average monthly return of +2.09% (56.9% positive months) – the strongest among all regimes. Tightening periods shrink that to just +0.06% per month (57% positive), indicating near‑flat performance when rates rise. Easing cycles still support modest gains (+1.14%/mo) but not as robust as stability, reflecting the brand’s reliance on predictable consumer financing costs rather than outright rate cuts.

Rate Regime Performance

Inflation Regime Performance

Regime & Cycle Analysis

MODG — Growth, Consumer & Cycle

Growth Regime Performance

Consumer Regime Performance

Business Cycle Performance

Historically MODG shines in Early Expansion (5 quarters, avg +8.73%/qtr) and still posts solid gains in Mid Expansion (+6.65%/qtr). In Late Expansion the stock turns negative (-7.40%/qtr), underscoring its vulnerability once growth momentum wanes.

Regime & Cycle Analysis

MODG — Regime Charts & Implications

Performance by Macro Regime

The current Stable‑rate, Elevated‑inflation backdrop is moderately favorable – the rate side aligns with MODG’s best regime, while inflation still poses margin pressure.

FORWARD LOOKING

If inflation eases into a Low‑inflation regime while rates remain Stable, MODG could sustain ~+2% monthly returns as discretionary spending rebounds. Conversely, a shift to Tightening rates combined with persistent Elevated inflation would compress margins and likely flatten stock performance near zero, eroding its recent upside.

INVESTOR TAKEAWAY

Allocate to MODG only if you expect the Fed to hold rates steady or ease modestly while inflation moderates. A rapid tightening cycle would neutralize its growth premium, making it a less attractive position relative to more defensive leisure stocks.

Cross-Sectional & Peer Comparison

MODG — Macro Sensitivity vs Peers

Benchmarking Topgolf Callaway Brands Corp. (MODG) against its Consumer Cyclical peers isolates relative macro exposures that drive earnings volatility beyond firm‑specific factors. Peer comparison reveals whether the stock’s risk profile is unusually sensitive to interest rates, inflation or GDP growth, informing positioning in divergent macro scenarios.

MODG rate sensitivity of -0.40 vs peer average of -0.19 makes it markedly more rate‑exposed than typical Consumer Cyclical peers, while its inflation sensitivity of -0.26 is less negative than the peer average of -0.09.

The company’s rate coefficient (-0.40) exceeds the sector mean by 111 basis points, indicating a higher revenue contraction per 100 bp rise in Fed rates. Conversely, its inflation beta (-0.26) is 170 basis points less negative than peers, suggesting costs are passed through more effectively. MODG’s GDP sensitivity (+0.25) sits just above the peer mean (+0.15), reflecting modest upside from economic expansion.

MODG’s business model—combining golf entertainment venues with retail apparel—relies heavily on discretionary spend that is financing‑sensitive, amplifying rate effects, while its product mix includes higher‑margin equipment that can absorb price inflation better than pure retailers.

Cross-Sectional & Peer Comparison

MODG — Positioning vs Peers

INVESTMENT IMPLICATION

In a falling‑rate environment, MODG stands to benefit disproportionately relative to peers, offering a potential earnings tailwind. However, any unexpected rate hikes would compress its top line more sharply, warranting a watch on Fed policy moves.

Overall, MODG is more vulnerable to interest‑rate movements but less hurt by inflation than its Consumer Cyclical set, with GDP exposure roughly in line. Its beta (0.93) aligns closely with the sector average, indicating comparable market volatility.

Sensitivity values are derived from ridge regressions of historical company fundamentals on macro variables.

Macro & Fundamental Time Patterns

MODG — Lead-Lag Analysis

Timing analysis reveals how quickly Topgolf Callaway Brands' (MODG) earnings respond to macro shifts, informing the optimal horizon for trade ideas. Because MODG’s revenue streams—consumer leisure spending and equipment sales—are tied to discretionary income, lag structures dictate when investors can anticipate upside or downside from rate moves, inflation trends, and labor market changes.

MODG’s fundamentals lag interest rates by 6 quarters, CPI by 3 quarters, move with GDP in real‑time, and only feel unemployment effects after 4 quarters.

The strongest leading signal is the Fed funds rate, with a correlation of 0.752 at a six‑quarter lag, indicating that each 100 bp hike today will start compressing MODG’s top‑line roughly one and a half years later. CPI follows next, showing a 0.636 correlation at a three‑quarter lag, so rising inflation erodes consumer discretionary spend on golf entertainment within nine months. By contrast, the unemployment rate is a lagging driver (r=0.725) that only impacts MODG after a full year, reflecting delayed labor market effects on disposable income.

Topgolf’s business model relies heavily on repeat visits to its venues and premium equipment sales, both of which are sensitive to consumers’ long‑term budgeting cycles; thus macro shocks translate into spending adjustments only after households reassess their financial position over multiple quarters.

TIMING IMPLICATION

Investors should front‑load exposure ahead of anticipated rate cuts, as the benefits will materialize in MODG’s earnings six quarters out, while remaining cautious on inflation spikes that could depress revenue within a year. A long‑dated macro view is essential for timing entry and exit points.

CYCLE POSITIONING

With a mid‑cycle designation and moderate persistence (half‑life of 3 quarters), MODG sits in the sweet spot where both growth and defensive attributes matter, making it attractive for investors who can time macro turns over the next 1–2 years.

Company Timing Profiles

Macro & Fundamental Time Patterns

MODG — Cross-Correlation Detail

Cross-Correlation Analysis Results

Pearson correlation between company fundamentals (quarter-over-quarter changes) and macro variables at each lag. Highlighted = significant.

Correlation by Lag

Macro & Fundamental Time Patterns

MODG — Response Persistence

Response Persistence

How quickly does the macro impact fade? Peak impact lag shows when the correlation is strongest. Half-life shows when it drops by half.

Methodology: Cross-correlation analysis at lags from -6 to 6 quarters. Minimum 12 observations required. Significance threshold: |r| > 0.25.

Impact Timeline

Solid bar = quarters from macro change to peak impact. Faded extension = half-life (quarters for impact to decay to 50% of peak). Left of center = macro leads company. Right = company leads macro.

Macro & Fundamental Time Patterns

MODG — Methodology & Data Sources

Analysis Parameters

Scenario Analysis & Stress Testing

MODG — Stress Test Results

The scenario analysis evaluates Topgolf Callaway Brands Corp. (MODG) revenue growth under four macroeconomic stress tests: a benign baseline, mild stress resembling early‑2022 conditions, severe stress calibrated to the 2008 GFC, and a rate‑shock scenario reflecting the 2022 tightening cycle. Each scenario applies observed changes in Fed Funds rates, CPI YoY, GDP growth, and unemployment to firm‑specific sensitivity coefficients derived from historical regressions.

Revenue growth swings from a +0.98 pp boost in the 2022‑style rate shock to a –2.35 pp contraction under a 2008‑like severe stress, yielding an overall impact range of roughly 3.3 percentage points.

Scenario Breakdown

Impact Decomposition (Worst Scenario)

In the mild‑stress case (early‑2022 analog), MODG sees a modest +0.25 pp lift driven primarily by inflation (+0.48 pp) offset by higher unemployment (−0.26 pp). The severe stress scenario generates the largest downside, –2.35 pp, where falling rates and CPI together erase 1.14 pp, while soaring unemployment adds another –1.05 pp. Conversely, the rate‑shock scenario produces a net +0.98 pp gain because higher rates (＋0.18 pp) and inflation (+0.96 pp) outweigh small GDP (−0.03 pp) and unemployment (−0.13 pp) drags.

Key Vulnerabilities

Unemployment sensitivity (‑0.263) is the dominant downside driver in severe stress, contributing –1.05 pp alone; inflation exposure (0.479) also magnifies both upside and downside, accounting for roughly 40% of total impact across scenarios.

MODG’s revenue shows limited resilience to macro headwinds—its positive rate coefficient is small (0.090), so monetary tightening offers only a modest tailwind, while the strong inflation link makes earnings vulnerable to CPI volatility. Overall, the firm is moderately exposed, with upside potential in inflation‑driven environments but pronounced risk if labor market weakness intensifies.

Key Takeaways

Investors should monitor CPI trends and unemployment data, as these two variables together explain over 80% of MODG’s revenue sensitivity.
A resurgence of high inflation (e.g., >3 pp YoY) could boost MODG’s top line by nearly +1 pp, but a sharp rise in joblessness would quickly offset gains, underscoring the need for balanced macro signals.
Given the low reliability of the underlying coefficients, scenario outcomes should be treated as directional guides; however, the severe‑stress tail risk (–2.35 pp) warrants a defensive positioning if early signs of a broader economic slowdown emerge.

Scenario Analysis & Stress Testing

MODG — Methodology & Reference

Scenario Definitions

Summary & Investment Implications

Key Takeaways

Topgolf Callaway Brands Corp. sits in a neutral macro fit with moderate sensitivity to both inflation and rates, while the current environment features stable policy rates (Fed Funds 3.63%) but elevated CPI at 3.68%. The stock’s upside is limited by its negative exposure to rising prices, yet it retains modest resilience given historical stress impacts ranging from -2.35pp in a severe 2008‑type shock to +0.98pp under a 2022‑type rate spike.

MODG

MODG’s moderate macro sensitivity combined with a neutral regime fit suggests the company will likely track broader consumer discretionary trends without extreme volatility. Its stress resilience is middle‑of‑the‑road, as historical simulations show a maximum downside of -2.35 percentage points in a severe recession versus a modest upside of +0.98pp when rates shock higher.

Investment Implications

Maintain a core long position sized at 5‑7% of portfolio NAV, reflecting the stock’s moderate upside potential under a gradual easing of inflation (CPI falling below 3%).
Add incremental exposure on dips if CPI surprises lower than the current 3.68% reading and Fed Funds remain stable, as the negative rate sensitivity implies revenue compression is limited in a low‑rate environment.
Consider hedging a portion of the position with short Treasury futures if forward rates rise above 4%, which historically translates into a ~0.15pp revenue drag per 100bp hike for MODG.

Trading Considerations

Watch the monthly CPI release; a sub‑3% print would trigger a near‑term rally, while any reading above 4% could prompt short‑term profit taking.
Monitor Fed’s policy statement for any hint of rate hikes; a surprise increase of 25bp would likely shave ~0.04pp off MODG earnings forecasts based on its -0.15 rate sensitivity.

Risk Watchlist

Persistently rising CPI above 4% (key risk: cpi_rising) – would exacerbate cost pressures and compress discretionary spend, potentially pushing revenue growth down by >1pp.
Unexpected tightening of rates beyond 4% (key risk: rate increase) – a 100bp hike historically reduces MODG’s earnings by ~0.15pp, widening the downside corridor toward the -2.35pp stress bound.

Key Takeaways

MODG thrives when inflation eases; a CPI dip below 3% is the most actionable catalyst.
Rate stability is crucial – any hike above 4% materially dents earnings.
The stock’s moderate stress resilience caps downside, but severe recession scenarios still pose a -2.35pp risk.

MODG

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Report written 2026-06-07 • Finexus

Disclaimer

This report is generated by Finexus and is provided for informational purposes only. It does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security.

The analysis is based on publicly available data from sources believed to be reliable, but Finexus does not guarantee its accuracy, completeness, or timeliness. Valuation estimates, projections, and any forward-looking statements are model outputs based on historical data and assumptions that may not hold in the future.

Past performance is not indicative of future results. Readers should conduct their own independent research and consult a qualified financial advisor before making any investment decision. Finexus and its contributors disclaim any liability for losses arising from the use of this report.