Levi Strauss earnings preview: where next for LEVI stock?

Levi Strauss is due to report second-quarter results this week, with investors eagerly waiting to see if sales have continued to recover since stores reopened. We explain what to expect from the results and consider how Levi Strauss shares could react.

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Levi Strauss Q2 earnings: when will they be released?

Levi Strauss will release second-quarter results on Thursday July 8. This will cover the three months to the end of May.

What to expect from the Levi results

Levi Strauss, known around the world for its denim jeans, has been steadily recovering since being hammered by the closure of stores last year. Although some remained closed, the vast majority of them are open and sales have been recovering faster than expected.

Analysts are expecting quarterly revenue to jump to $1.21 billion from just $497.5 million the year before and for the company to report diluted EPS of $0.10 compared to a $0.91 loss. Importantly, the results will be flattered as it comes up against weak comparatives from last year when the pandemic erupted and lockdowns were first introduced, causing sales to plunge and pushing it into the red.

The online segment of the business will still be under the spotlight even as stores have reopened. Digital sales were up 41% in the first quarter and accounted for 26% of total sales, while its direct-to-consumer digital offering reported a 10% jump in sales.

Investors will want to see evidence that the recovery has continued into the second-quarter. Europe will be closely watched after Levi Strauss said the situation there remained highly uncertain back in April. Investors will also be eagerly watching to see if the company has managed to maintain the record gross margins delivered in the first quarter.

Investors will be hoping for a buoyant outlook. Markets currently expect Levi Strauss to stage a strong recovery and believe profits can return to pre-pandemic levels this year.

Notably, the company raised its guidance for the first-half back in April and said it was aiming to deliver 24% to 25% year-on-year growth in revenue and adjusted earnings per share of $0.41 to $0.42 compared to a $0.07 loss the year before. It also raised its second-quarter dividend to $0.06 from the $0.04 paid in the first to reflect its growing confidence.

That is supported by a bullish view from brokers, which unanimously agree that the company is currently undervalued despite the fact shares have risen over 43% since the start of 2021. They currently have an average Buy rating on the stock with a target price of $31.25, about 9% higher than its current share price. Three brokers rate the stock as a Strong Buy and six at Buy. No brokers rate the stock at Hold, Sell or Strong Sell.

Where next for LEVI stock?

The Levi share price has been trending higher since September last year. The price hit an all-time high of $30.84 in early May and eased lower. The share price continues to trade above its 50 & 100 day sma and its multi-month ascending trendline, having briefly dipped below two of these keys supports in June. 

The RSI is above 50 but below the overbought level of 70 and pointing higher, suggesting that there could be more upside to be had.  

Resistance can be seen around $29.75 the high May 12 & 18, before buyers look to target $30.84 and beyond to fresh all-time highs. 

On the flip side, immediate support can be seen at $27.70 the 50 sma and $27.50 the ascending trendline support. A breakthrough this zone of contention could open the door to the 100 sma at $26.20 and on towards $24.40. It would take a move below $24.40 for the sellers to pick up traction. 

How to trade LEVI stock

You can trade Levi Strauss shares with City Index by following these four easy steps:

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for ‘Levi Strauss’ or ‘LEVI’ in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade 

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