Q2 STOCKS TO BUY

Should You Buy the Dip on Levi Strauss Stock?

LEVI has soared 100% year-over-year

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Levi Strauss & Co. (NYSE: LEVI) is one of the world's largest brand-name apparel companies. Levi Strauss' products are sold in more than 110 countries worldwide through a combination of chain retailers, department stores, online sites, and a global footprint of approximately 3,000 retail stores and shop-in-shops. This afternoon, LEVI was last seen down 0.4% at $25.31. 

On Sept. 22, LEVI announced that the senior leadership team will host a conference call to discuss the retail brand's financial results for the third quarter of 2021. The call will be held on Wednesday, October 6, and will be hosted by Chip Bergh, LEVI's President and CEO, and Harmit Singh, LEVI's Chief Financial Officer. 

Levi Strauss has beat earnings expectations on all four of its earnings reports released over the past year. For Q3 of 2020, the retail brand beat analysts’ estimates by a margin of $0.30, reporting an EPS of $0.08. For Q4 of 2020, LEVI's EPS increased to $0.20, beating expectations by a margin of $0.05. For Q1 of 2021, Levi Strauss had another increase in earnings, rising to $0.34 per share and beating estimates by a margin of $0.09.

Most recently, for Q2 of 2021, LEVI reported an EPS of $0.23 and beat expectations by a margin of $0.14. At least four analysts subsequently upped the security's price target following the release of Q2 earnings. Levi Strauss also forecast a stronger-than-expected full-year forecast, thanks to a quicker-than-expected rebound in demand for jeans, tops, and jackets as customers refresh their wardrobes amid easing pandemic restrictions. Wall Street consensus estimates project that Levi Strauss will report an EPS of $0.37 in the upcoming Q3 earnings report.

Levi Strauss stock has increased about 100% in price year-over-year when LEVI bottomed at a 52-week low of $12.56. Additionally, shares of LEVI have grown 29% year-to-date but Levi Strauss stock is currently down 17% from its record high of $30.84 tapped in early May. Moreover, Levi Strauss offers a forward dividend of $0.18 and a dividend yield of 0.74%.

From a fundamental point of view, LEVI could still have more upside as a recovery play. The denim company experienced consistent revenue and net income growth between fiscal 2017 and fiscal 2019. Overall, with a forward price-earnings ratio of 16.98, LEVI remains an intriguing value play for long-term investors.

Short interest has dropped off recently, down 7.7% during the most recent reporting period. This accounts for 4.4% of the stock's total available float, and would take shorts two days to buy back.

 
 

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