Aggressive Traders Could Double Their Money On LEVI With This Trade

Shares of Levi Strauss & Co. (LEVI) recently broke out to a fresh 52-week peak following another solid earnings announcement. The company reported a first-quarter profit of $0.34 per share on revenue of just north of $1.3 billion. Wall Street was looking for a profit of $0.25 per share on sales of $1.25 billion.

Levi Pants

The $0.09 beat was the fourth straight from Levi Strauss, with the prior three quarters topping estimates by $0.05, $0.30, and $0.01, respectively. More importantly, the company raised its fiscal first half 2021 net revenues outlook to 24%–25% growth versus for the first half of 2020 and upped its first-half adjusted earnings per share estimate to $0.41–$0.42. Analysts had expected a first-half profit of $0.30 per share.

Although Levi Strauss has been around for 168 years, the stock became publicly available to trade again in March 2019 at around $22 a share. The company previously had its first initial public offering (IPO) in 1971 and traded until 1985, when the founder’s descendants took the company private in a leveraged buyout.

In the second IPO, the Haas family sold more than 21 million shares for proceeds of nearly $317 million. Additionally, due to the dual-class shareholder structure, the family still holds nearly 81% of the total shareholder voting power after the offering.

Each share of the Class B common stock the family holds is entitled to 10 votes, compared with one vote for the Class A shares. One of the key reasons Levi Strauss went public again as an IPO was to allow the family to cash out some of their holdings yet retain control.

This was an excellent move, as Levi Strauss has doubled down on the brand and its capabilities. The company has used the pandemic to get a bit tighter on cost structure and will emerge from the pandemic with a brand that is on a tear around the world.

In a recent interview, the company’s CEO, Chip Bergh, said there is virtually no limit to upside from a pricing standpoint as the brand continues to resonate with consumers. He also noted looser fits are the fastest-growing part of the business and could present a new denim cycle.

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