Levi Strauss (LEVI) has had a wild rise today after the company reported mixed fiscal fourth-quarter results last night. EPS of $0.44, vs. $0.34 last year, were $0.01 above expectations, while revenue growth of 3% was slightly below forecasts. The better results were driven by the increase in sales, lower products, a favorable product mix, and greater sales at full price.

Management was somewhat cautious about 2024, with EPS guidance for the year of $1.15 to $1.25, compared to expectations of $1.30. However, $0.05 of the lower guidance was due to a higher-than-expected tax rate, and expected results still represent an improvement from $1.10 in 2023. I think the company is being a little conservative with guidance to take some pressure off new CEO Michelle Gass, who will move up from President on Monday.

Shares surged initially this morning, before soon dropping back. While the market got ahead of itself today, there is reason to be excited about LEVI.

Direct to Consumer revenues were up 11% in the quarter, an encouraging sign as the company switches to a model that’s less dependent on the retail trade. The company productivity efforts, which include a 10% reduction in jobs, will save LEVI $100 million when fully implemented, which will give a meaningful boost to EPS considering the company has 397 million shares outstanding.

At 12.6X the high end of guidance, and with a dividend yield of 3.05%, the stock is very good value. Buy LEVI under $17. My target is $20.