Levi Strauss & Co. (LEVI) reported a notable earnings beat for Q2 fiscal 2026, posting adjusted earnings of 28 cents per share, surpassing the Zacks Consensus Estimate of 24 cents by 16.7%. This marked an increase from 22 cents the previous year, with revenues rising 8% to $1.56 billion, exceeding forecasts by 2.5%. Organic revenue growth was 5.7%, driven by contributions across various regions and product categories.
Management raised its fiscal 2026 outlook, projecting reported revenue growth of 7%-7.5%, up from 5.5%-6.5%, and adjusted earnings per share guidance increased to $1.46-$1.52 from $1.42-$1.48. Cash flow also strengthened significantly, with adjusted free cash flow climbing nearly 60% year over year to approximately $231 million. However, valuation concerns linger as LEVI shares have appreciated 17.4% over the last three months, trading at 15.45X forward earnings, which is above its five-year median.
Levi’s operations face potential risks from tariffs and foreign exchange pressures, which impacted gross margin in Q2 and are forecasted to hinder earnings per share in Q3. With ongoing cost concerns and an expected adjusted EBIT margin of 12% for fiscal 2026, the stock currently carries a Zacks Rank of #3 (Hold).
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