The iconic apparel company Levi Strauss & Co. (LEVI) is expected to release its third-quarter 2024 earnings results on October 2. Wall Street analysts project an improvement in both earnings and revenues for Q3, anticipating a slight revenue gain of 2.6% year-over-year to $1.55 billion and a 10.7% increase in earnings per share to $0.31.
In terms of share price, Levi Strauss has experienced significant growth, with gains of 32% year-to-date and 67% over the past year. The company has also demonstrated strong financial performance, surpassing consensus EPS estimates for nine consecutive quarters.
However, rising inflation is increasing pressure on consumer spending, which may reduce demand for discretionary items like apparel. This trend could result in greater volatility in Levi’s performance.
What to Watch When LEVI Reports Its Q3 Earnings
When Levi Strauss reports its earnings, it would be helpful to watch the following, apart from the usual earnings metrics:
- Guidance: In the last earnings call, Levi issued lower-than-expected full-year guidance, which unsettled the markets. It would be wise to pay attention to any updates on this front, especially comments about future sales expectations and market conditions.
- Overall Financial Performance: Levi Strauss has struggled to meet both historical standards and long-term goals. CEO Michelle Gass recently told the Financial Times that the company’s revenue target of $9B-$10B by 2027 will take longer to achieve due to rising inflation and consumer spending pressures. It would be important to assess the extent to which these headwinds may affect the company’s performance moving forward.
- Comments on Levi’s Global Markets: LEVI has been grappling with challenges across a few of its international markets. In Q2, revenues from Europe dropped by 2% year-over-year, while Asia saw a 1% decline. These figures highlight how global headwinds, such as weaker consumer demand and macroeconomic pressures, continue to impact Levi’s performance outside the U.S. It will be critical to observe how the company plans to counter these trends and whether it will adjust its strategies in these key markets to improve revenue.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can gauge what options traders anticipate for LEVI stock right after its earnings report. The expected earnings move is calculated by evaluating the at-the-money straddle of options that are set to expire soon after the announcement.
At present, the Options tool indicates that options traders are predicting a 9.32% swing in either direction for Levi Strauss stock.
Is LEVI a Good Stock to Buy Right Now?
Turning to Wall Street, Levi Strauss has a Moderate Buy consensus rating based on four Buys and three Holds assigned in the last three months. At $24, the average LEVI price target implies 11.84% upside potential.
