Levi Strauss (LEVI) Suffers a Larger Drop Than the General Market: Key Insights

Levi Strauss (LEVI) shares underperformed the S&P 500 in the latest trading session, closing down 1.06% at $17.74. Despite a 12.34% gain over the previous month, analysts anticipate a year-over-year decrease in both EPS (forecasted at $0.13, down 18.75%) and revenue (forecasted at $1.37 billion, down 5.23%) in the upcoming earnings disclosure; full-year estimates also indicate declines. The stock currently holds a Zacks Rank of #3 (Hold) and trades at a Forward P/E of 14.58, a discount compared to its industry's average, but investors should note the industry's relatively low Zacks Industry Rank.

Analysis

Levi Strauss (LEVI) shares recently underperformed the broader market, closing at $17.74 with a 1.06% daily loss, which contrasted with its significant 12.34% gain over the preceding month that outpaced both the Retail-Wholesale sector and the S&P 500. Investor focus is now on the upcoming earnings disclosure, where analysts project a challenging quarter with an expected earnings per share (EPS) of $0.13, marking an 18.75% year-over-year decline, and revenue forecasted at $1.37 billion, down 5.23% from the prior year's corresponding quarter. The full-year Zacks Consensus Estimates also indicate anticipated contractions, with EPS expected at $1.23 (a 1.6% decrease) and revenue at $5.97 billion (a 6.11% decrease). Despite these projections, the Zacks Consensus EPS estimate has remained steady over the past month, and LEVI maintains a Zacks Rank of #3 (Hold). Valuation metrics show LEVI trading at a Forward P/E ratio of 14.58, below its industry average of 17.35, and a PEG ratio of 1.69, also slightly under its industry's average of 1.92. However, the Retail - Apparel and Shoes industry itself is positioned in the bottom 45% of over 250 industries according to its Zacks Industry Rank of 137, suggesting broader sector headwinds.

Key Decisions for Investors

• Investors should closely scrutinize Levi Strauss's upcoming earnings report, as the forecasted 18.75% year-over-year EPS decline and 5.23% revenue decrease for the quarter could pressure the stock despite its recent monthly outperformance.
• The current Zacks Rank of #3 (Hold) and stable consensus EPS estimates over the past month suggest a cautious stance; consider awaiting the earnings results and forward guidance before making significant portfolio adjustments.
• Evaluate the stock's discounted Forward P/E ratio of 14.58 against the anticipated full-year financial contraction and the challenging outlook for the Retail - Apparel and Shoes industry, which currently ranks in the bottom 45% by Zacks.