- If you are wondering whether Levi Strauss stock still offers value after its recent run, or if you may be late to the party, this article breaks down what the current price might be implying about the company.
- With the share price at US$23.03 and returns of 5.2% over 7 days, 17.2% over 30 days, 10.6% year to date and 42.8% over 1 year, many investors are questioning what is already priced in.
- Those moves sit alongside a longer record, with returns of 83.4% over 3 years but a 4.9% decline over 5 years. This gives a mixed picture of how the market has treated the stock over different time frames and raises a clear question: is the current valuation anchored in fundamentals or in shifting sentiment?
- Simply Wall St currently gives Levi Strauss a valuation score of 5 out of 6, and the rest of this article will look at what different valuation methods say about that score, before finishing with one approach that can help you put all the numbers in context.
Approach 1: Levi Strauss Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model takes the cash flows a company is expected to generate in the future, then discounts them back to today to estimate what those future dollars are worth right now.
For Levi Strauss, the model uses last twelve months free cash flow of about $440.1 million, then applies a 2 Stage Free Cash Flow to Equity approach. Analysts provide explicit free cash flow estimates out to 2028, with Simply Wall St extrapolating further years. Within that, the ten year projection includes a 2035 free cash flow estimate of about $1.06b, all in $.
When all those projected cash flows are discounted back and summed, the DCF output suggests an intrinsic value of about $33.16 per share. Against the recent share price of $23.03, this indicates the stock is trading at roughly a 30.5% discount to that DCF estimate, according to this model.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Levi Strauss is undervalued by 30.5%. Track this in your watchlist or portfolio, or discover 44 more high quality undervalued stocks.
Approach 2: Levi Strauss Price vs Earnings
For profitable companies, the P/E ratio is a useful way to gauge how much you are paying for each dollar of earnings, which is typically more relevant to shareholders than sales or book value alone.
A “normal” or “fair” P/E usually reflects what investors expect for future earnings growth and how much risk they see in those earnings. Higher expected growth or lower perceived risk can support a higher P/E, while lower growth or higher risk tends to line up with a lower P/E.
Levi Strauss currently trades on a P/E of 16.44x. That sits below the Luxury industry average of about 21.76x and below the peer average of 57.02x, so the stock trades at a lower multiple than both its broader sector and selected peers.
Simply Wall St’s “Fair Ratio” is a proprietary estimate of what Levi Strauss’ P/E might be based on factors such as its earnings growth profile, industry, profit margins, market cap and company specific risks. This can be more tailored than a simple comparison with industry or peer averages because it adjusts for what is specific to the company rather than assuming all stocks deserve similar multiples.
For Levi Strauss, the Fair Ratio is 23.24x versus the current P/E of 16.44x, suggesting the stock trades below that tailored benchmark.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Levi Strauss Narrative
Earlier it was mentioned that there is an even better way to understand valuation. This is where Narratives come in as a simple way for you to attach a clear story to the numbers you are seeing for Levi Strauss.
A Narrative is your view of how the business might play out, translated into a forecast for future revenue, earnings and margins, and then into a Fair Value that you can compare with the current share price.
On Simply Wall St, Narratives sit inside the Community page and are designed so that any investor can use them without needing to build a full model. You select or adjust a story that fits your view and the platform links it directly to a set of financial assumptions.
For Levi Strauss, one investor might choose a more cautious Narrative that lines up with a Fair Value close to US$23.00. Another might choose a more optimistic Narrative that points to a Fair Value nearer US$32.66. Comparing each Fair Value with the current price helps you decide whether you see the stock as cheap, expensive or roughly fair for your chosen story.
As new information comes in, such as updated earnings guidance, tariff news or changes to analyst targets, these Narratives are refreshed so your chosen story and Fair Value keep tracking the latest data rather than going stale.
For Levi Strauss, here are previews of two leading Levi Strauss Narratives that aim to make the picture clearer:
Fair Value: US$32.66
Implied discount to this Fair Value vs the current US$23.03 price: about 29.5%.
Revenue growth assumption: 6.82%.
- Views Levi Strauss as benefiting from direct to consumer expansion, international exposure and product extensions into lifestyle categories.
- Assumes rising profit margins and higher earnings by 2029, with the stock trading on a 17.0x P/E on those earnings.
- Highlights risks around denim reliance, digital execution, tariffs, fashion cycles and the pace of progress on sustainability and supply chain changes.
Fair Value: US$23.00
Implied premium to this Fair Value vs the current US$23.03 price: about 0.1%.
Revenue growth assumption: 3.85%.
- Focuses on tariff exposure, international risk and the possibility that direct to consumer expansion adds cost without matching returns.
- Builds in slower revenue growth and a lower future P/E of 13.3x by 2029, even with higher profit margins than today.
- Accepts that brand strength, product diversification and solid direct to consumer and e commerce performance could still support earnings, but treats these as offsets rather than the core case.
Seen together, these Narratives set out a valuation range from roughly US$23.00 to US$32.66. Your task as an investor is to consider which set of assumptions is closer to how you think Levi Strauss will actually perform, and what risks you are comfortable with in your own portfolio.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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