You might know Topgolf Callaway Brands (NYSE: MODG) as a leader in golf equipment sales. But after its mega-merger (and subsequent name change) in early 2021 with Topgolf, this stock is now much more than just a seller of drivers and putters, having expanded into golf entertainment, driving range software, smartphone games, and golf apparel.

As the company opens up more Topgolf locations and grows Topgolf revenue, its consolidated business becomes less reliant on the cyclical golf equipment industry. This makes the stock potentially undervalued because Wall Street still sees it as a low-growth equipment manufacturer when it is now a fast-growing golf entertainment brand.

But investors have recently turned bearish on Topgolf Callaway after its recent earnings report, sending shares down 12.5% this year while the S&P 500 has shot up 8%. Here's why the stock is underperforming and why the market could be wrong about this golfing, apparel, and entertainment stock.

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Source Fool.com