Levi Strauss May Be a Super Buying Opportunity After the Earnings Dip

Key Points

• LEVI stock pulled back after earnings despite a double beat, as lighter EPS guidance and tariff concerns weighed on investor sentiment.
• Levi Strauss continues to transform its business, driven by growing direct-to-consumer sales, e-commerce expansion, and early momentum from Beyond Yoga.
• Technical indicators suggest LEVI stock may be near an inflection point, with narrowing Bollinger Bands and improving momentum setting up a potential rebound.

The key theme for this earnings season is that good enough isn’t good enough. Levi Strauss & Co. NYSE: LEVI scored a double beat in its fourth-quarter earnings report. But the company’s guidance, particularly its earnings guidance, came in lighter than analysts expected, and LEVI stock was down about 7% at the opening of trading on Feb. 2.

Levi’s beat on the top and bottom lines. Adjusted earnings per share (EPS) came in at 41 cents, which was two cents above estimates for 39 cents. Revenue of $1.77 billion topped forecasts for $1.71 billion. That revenue was also up 5% on an organic basis.

Those numbers were lower on a year-over-year basis. EPS was down 18% and revenue was down 14%. Plus, operating margins of 11.9% were flat.

Looking ahead to 2026, the company is projecting reported revenue growth of 5% to 6%. However, the company’s EPS guidance for $1.40 to $1.46 per share comes in a little light of analysts' forecasts for 9.45% earnings growth in the next 12 months.

The lighter guidance can be attributed to tariffs, which have hit Levi Strauss harder than many other retailers. For its part, the company didn’t dwell on the tariffs and reiterated its belief that factors such as pricing power with vendors, combined with lower cotton prices, will be two reasons that the company may be able to offset the tariff impact.

Levi’s Continues to Transform Its Business

Levi Strauss is a name associated with denim. That’s not going to change; in fact, the company is leaning into what it calls a “head-to-toe denim lifestyle.” However, the company is also making moves beyond denim with its small but fast-growing Beyond Yoga business.

The company is also seeing growth in both its e-commerce and its brick-and-mortar business. The company’s direct-to-consumer business contributed 49% of the company’s overall revenues in the quarter, with e-commerce accounting for 22%. The company also plans to add 50 to 60 stores in 2026, bringing its total to 200.

Could LEVI Stock Get a Super Bowl Bump?

Super Bowl LX will be played at the home of the San Francisco 49ers, otherwise known as Levi’s Stadium. The Super Bowl venues are chosen years in advance, so this is a coincidence, but it’s one of those coincidences that may turn into a “happy accident” for LEVI shareholders.

Not only will the brand name be front and center during the game, as well as the lead-up to it, but Levi’s will also debut their new advertising campaign during the game. It will be the company’s first Super Bowl commercial in 20 years.

For many viewers, the Super Bowl commercials are more significant than the game itself, so Levi’s could get some buzz, particularly from the coveted demographics that can spur growth.

Investors won’t know if the ad campaign and Super Bowl sponsorship will spike revenue and earnings until its next earnings report. Nevertheless, as much as the company is paying for the commercial placement, it will also enjoy a significant amount of free publicity.

Marketing campaigns are an ancillary reason to buy a stock. However, when you combine that with the current technical picture for LEVI stock, investors may think differently.

LEVI Stock Is at an Inflection Point

Just as the Levi CEO believes the company is at an inflection point, the same can be said of the stock. In the last three months, the stock has been rangebound, which is still better than many stocks in the retail sector. However, the stock is now trading near the bottom of its Bollinger Bands, which have narrowed significantly.

Narrowing Bollinger Bands usually indicates that a stock is ready to break out. That could mean a breakout in either direction. However, with the price testing the lower Bollinger Band and the 20-day simple moving average (SMA) converging on the longer 150-day SMA, the time could be right.

That’s supported by momentum indicators. The MACD has flattened after a prior downward move, which indicates that bearish momentum is slowing and sets up the potential for a bullish move higher. Plus, the RSI (not shown) is in the mid-30s. That’s another reason to believe that there could be a mean-reversion rally.