Subscribe to Entrepreneur for $5
Subscribe

Here's How Levi Strauss (LEVI) Looks Just Ahead of Q3 Earnings

Levi Strauss' (LEVI) third-quarter fiscal 2021 results might show gains from its solid omni-channel initiatives and brand strength.

By
This story originally appeared on Zacks

Levi Strauss & Co. LEVI is likely to register top- and bottom-line growth when it reports third-quarter fiscal 2021 results on Oct 6, after market close. The Zacks Consensus Estimate for quarterly earnings has increased a penny to 38 cents over the past 30 days, which suggests a significant increase from 8 cents earned in the year-earlier quarter.



The consensus estimate for quarterly revenues stands at $1,452 million, which indicates an improvement of about 37% from the year-ago quarter’s reported number.



The company delivered an earnings surprise of 92.4%, on average, over the trailing four quarters. In the last reported quarter, it came up with an earnings surprise of 155.6%.

- Zacks

Key Factors to Note

Levi Strauss is benefiting from its robust omni-channel initiatives. The company has been strengthening its omni capabilities for a while now, which include Buy Online, Pick-up In Store, line-queuing, same-day delivery, mobile checkout and return capabilities consisting of contactless returns. Gains from e-commerce, direct-to-consumer and wholesale channels might have boosted the company’s top-line performance in the fiscal third quarter.



In addition, Levi Strauss is witnessing broad-based strength across its business as it continues to recover from the pandemic lows. The company has been elevating brands, investing in digital tools and capabilities, and pacing up efforts for some time now to diversify across geographies, product categories and distribution channels.



On its last earnings call on Jul 8, management projected growth of 28-29% in revenues from the year-ago reported figure for the second half of fiscal 2021. This, in turn, implies revenue growth of 4-5% from the second-half fiscal 2019 tally including currency benefits of two points. For the Americas, management expected second-half reported revenues to grow in mid-single digits from the fiscal 2019 levels. For Europe, it predicted a high-single to low-double digit increase. For Asia, it forecast revenues for the second half to remain below the fiscal 2019 levels due to the pandemic adversities despite sturdy growth in China.



For the second half of fiscal 2021, management had then envisioned a gross margin of mid-56%, which suggests an expansion of about 300 basis points from the second-half 2019 number. With respect to adjusted SG&A, the company had anticipated a $100-million jump for the second half from the same-period figure in 2019. The company has also increased its advertising investments. Nonetheless, management had assumed adjusted earnings for the second half to be 72-76 cents per share. Second-half bottom-line expectation indicates growth of above 26% from the fiscal 2019 levels.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Levi Strauss this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Levi Strauss & Co. Price and EPS Surprise

Levi Strauss & Co. Price and EPS Surprise

Levi Strauss & Co. price-eps-surprise | Levi Strauss & Co. Quote

Levi Strauss has an Earnings ESP of +5.82% and a Zacks Rank #2, currently.

Other Stocks Poised to Beat Earnings Estimates

Here are some other companies that you may also want to consider as our model shows that these have the right combination of elements to beat on earnings:



Group 1 Automotive GPI currently has an Earnings ESP of +3.49% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.



Gap GPS has an Earnings ESP of +2.94% and is Zacks #1 Ranked, presently.



Chipotle CMG has an Earnings ESP of +1.09% and a Zacks Rank of 2 at present.



Zacks' Top Picks to Cash in on Artificial Intelligence

In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.

See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>



Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report

 

The Gap, Inc. (GPS): Free Stock Analysis Report

 

Group 1 Automotive, Inc. (GPI): Free Stock Analysis Report

 

Levi Strauss & Co. (LEVI): Free Stock Analysis Report

 

To read this article on Zacks.com click here.

 

Zacks Investment Research