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Is Levi Strauss (LEVI) a Buy Heading into Q2 Earnings Announcement?

Well-known apparel company Levi Strauss LEVI is set to report quarterly results Thursday after the bell. Levi Strauss, a Zacks Rank #3 (Hold), has a robust history of exceeding earnings estimates. But as retailers have struggled lately, is this recognized brand name a buy heading into earnings?

Shares of LEVI have fallen -35% this year amid continued weakness in the retail space. Analysts are expecting the company to post fiscal Q2 EPS of $0.23 per share, which would translate to a flat quarter versus the same period in the prior year.

While Levi Strauss has a robust history of surpassing earnings estimates (currently on a twelve-quarter run of earnings beats in a row), intense competition and higher expenses are ongoing concerns. LEVI’s Earnings ESP (Expected Surprise Prediction) is +6.67%, indicating another earnings beat may be in the cards for the popular jean maker.

Shares are relatively overvalued at a 10.5 forward P/E compared to LEVI’s industry group (8.94). The stock is in a sustained downtrend and is making a series of lower lows. With other companies faring better off lately, it’s safe to say opportunities exist elsewhere in the current investment environment.

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