Levi Strauss & Co. (LEVI) Stock Analysis
Is LEVI a good investment?
Levi Strauss & Co. (LEVI) has a Plutrex AI rating of 75.5/100 as of August 19, 2026, indicating a Buy consensus. The stock is not classified as halal-compliant. Key strength: Profitability dominance with ROE of 25.4% (+149% vs. industry average 10.18%), net margin of 7.31% (+138% vs. industry average 3.07%), and gross margin of 61.9% (+860 bps vs. industry average 53.4%) — LEVI is the undisputed profitability leader in its peer group, supported by FCF of $590.2M and cash of $977.8M. Main concern: Structural forward growth deficit vs. peers: next-year EPS growth of 10.96% is 57.2% below the industry average of 25.61%, and 5-year EPS CAGR of 13.51% is 34.1% below the industry average of 20.51% — this gap is UNCHANGED from the prior report and prevents multiple expansion, limiting the P/E discount from being a pure mispricing opportunity; the YoY EPS growth of only 1.4% creates a credibility gap with forward projections.
Investment Summary
Levi Strauss (LEVI) at $22.01 presents a compelling quality-at-discount opportunity for patient investors. The stock trades at a P/E of 18.01x — a 46.1% discount to the apparel industry average of 33.42x — while delivering ROE of 25.4% (vs. industry average 10.18%), net margin of 7.31% (vs. industry average 3.07%), and gross margin of 61.9% (vs. industry average 53.4%). The PEG ratio of 0.95 sits below the critical 1.0 threshold, confirming growth-adjusted undervaluation. The analyst consensus target of $28.27 implies 28.4% upside from current levels. The primary governor on conviction remains the structural forward growth deficit: next-year EPS growth of 10.96% trails the industry average of 25.61% by 57.2%, and the 5-year EPS CAGR of 13.51% trails the industry average of 20.51% by 34.1%. The cybersecurity breach (headlines: 'Levi Strauss reveals cybersecurity breach amid wider wave of attacks' and 'Social Engineering Scam Breaches Levi Strauss Company Files') remains an unresolved risk. Positive catalysts include raised 2026 guidance, DTC-first strategy gains, and AI/digital initiatives. The stock has declined a further 3.2% since the prior report ($22.74 → $22.01), modestly improving the entry setup. Rating maintained at 75.5/100 with a Buy recommendation at medium conviction.
Key Strengths
- Profitability dominance with ROE of 25.4% (+149% vs. industry average 10.18%), net margin of 7.31% (+138% vs. industry average 3.07%), and gross margin of 61.9% (+860 bps vs. industry average 53.4%) — LEVI is the undisputed profitability leader in its peer group, supported by FCF of $590.2M and cash of $977.8M
- Compelling valuation with P/E of 18.01x at a 46.1% discount to the industry average of 33.42x, PEG of 0.95 below the critical 1.0 threshold and 15.9% below the industry average of 1.13, and analyst consensus target of $28.27 implying 28.4% upside — the entry setup has improved materially as the stock has declined 3.2% since the prior report
- Positive business momentum with raised 2026 guidance, DTC-first strategy driving broad-based growth across channels, geographies, genders, and product categories (headline: 'Levi Strauss' DTC-First Strategy Strengthens Growth Momentum'), and AI/digital initiatives signaling operational modernization (headline: 'How LEVI Is Using Digital Growth and AI to Reshape Its Future Path')
Key Concerns
- Structural forward growth deficit vs. peers: next-year EPS growth of 10.96% is 57.2% below the industry average of 25.61%, and 5-year EPS CAGR of 13.51% is 34.1% below the industry average of 20.51% — this gap is UNCHANGED from the prior report and prevents multiple expansion, limiting the P/E discount from being a pure mispricing opportunity; the YoY EPS growth of only 1.4% creates a credibility gap with forward projections
- Cybersecurity breach risk remains unresolved: headlines 'Levi Strauss reveals cybersecurity breach amid wider wave of attacks' and 'Social Engineering Scam Breaches Levi Strauss Company Files' represent ongoing reputational, regulatory, and remediation cost risks that could pressure the already-thin operating margin of 9.04%; no material resolution has been reported since the prior report
Plutrex 10-Factor AI Breakdown
Fundamental Analysis
LEVI's fundamentals reflect a high-quality mature brand with a bifurcated profile. Profitability is exceptional: gross margin of 61.9% exceeds the industry average of 53.4% by 860 bps, demonstrating durable brand pricing power. Net margin of 7.31% is 138% above the industry average of 3.07%, and ROE of 25.4% is 149% above the industry average of 10.18% — the single strongest relative metric in the peer comparison. FCF of $590.2M and cash of $977.8M provide robust downside support. However, the 52.9-point gap between gross margin (61.9%) and operating margin (9.04%) reveals a heavy SG&A burden that neutralizes the gross profit advantage at the operating line, where LEVI is essentially at industry parity (9.04% vs. 9.38%). Financial health is adequate but not fortress-level: D/E of 0.89 is modestly below the industry average of 1.00, but net margin of 7.3% leaves limited buffer against cost inflation. Valuation is the most favorable dimension: P/E of 18.01x is 46.1% below the industry average of 33.42x, and PEG of 0.95 is below both the 1.0 fair-value threshold and the industry average of 1.13. Growth is the critical weakness: revenue growth of 8.0% trails the industry average of 12.18% by 34.3%, and forward EPS growth of 10.96% (next year) and 13.51% (5-year) trail industry averages of 25.61% and 20.51% by 57.2% and 34.1% respectively. The YoY EPS growth of only 1.4% versus the 31.1% historical earnings growth figure raises earnings quality questions. The intrinsic value assessment is moderately undervalued: at a fair-value PEG of 1.0, the implied P/E would be 13.51x — but the current P/E of 18.01x is justified by the profitability premium and brand quality, and the analyst consensus target of $28.27 provides a 28.4% upside anchor.
News Sentiment
Levi Strauss is navigating a tale of two stories — strong business momentum on one side, and a cybersecurity scare on the other. The iconic denim brand has been firing on all cylinders operationally, with its 'DTC-first' strategy paying off as direct-to-consumer sales surge across channels, geographies, and product categories. Management was confident enough to raise its full-year 2026 guidance following a strong quarterly performance, signaling they see the good times continuing. The company is also betting big on the future, using artificial intelligence and digital tools to reshape how it designs, markets, and sells its products — a move that analysts say could meaningfully improve profit margins over time. But not everything is rosy. Levi recently disclosed a cybersecurity breach in which unauthorized third parties accessed company files through a social engineering scam — essentially tricking employees into handing over access. While the company framed the incident as part of a broader wave of cyberattacks hitting corporate America, data breaches carry real costs: potential regulatory fines, expensive IT remediation, and the kind of reputational damage that can linger. For investors, the question is whether Levi's strong brand, exceptional profitability, and improving digital strategy can outweigh the growth gap versus faster-moving peers and the new cybersecurity cloud hanging over the stock. With shares down roughly 10% from recent highs and trading at a steep discount to competitors, the risk-reward is starting to look interesting for patient, value-oriented investors.
Risk Assessment
PRIMARY RISK: Structural growth deficit — LEVI's forward EPS growth of 10.96% (next year) and 13.51% (5-year) trail the industry by 57.2% and 34.1% respectively. If management cannot deliver margin expansion to bridge the gap between 1.4% YoY EPS growth and 11-13.5% forward projections, the PEG-based undervaluation thesis becomes illusory and the P/E discount to peers is fully justified rather than a mispricing. SECONDARY RISK: Cybersecurity breach — the social engineering attack disclosed in recent headlines carries potential regulatory fines (GDPR/CCPA exposure), remediation costs, and reputational damage that could pressure the 9.04% operating margin. TERTIARY RISK: SG&A leverage — the 52.9-point gap between gross margin (61.9%) and operating margin (9.04%) means any revenue softness amplifies operating deleverage. MITIGATION: Stop-loss at $19.50 (approximately 10.6% below entry midpoint of $21.63) limits downside to a level where the investment thesis would be materially impaired; position size of 3.0% reflects medium conviction appropriate for the growth deficit and cybersecurity overhang. The $977.8M cash position and $590.2M FCF provide meaningful downside support.
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Frequently Asked Questions
Is LEVI a halal stock?
No, Levi Strauss & Co. (LEVI) is currently not classified as halal by AAOIFI criteria.
What is Plutrex's AI rating for LEVI?
Levi Strauss & Co. (LEVI) has a Plutrex AI rating of 75.5/100 with a Buy consensus, based on a 10-factor analysis covering financial health, growth, valuation, profitability, debt, analyst sentiment, technical momentum, insider confidence, news sentiment, and halal compliance.
Is LEVI a good investment?
According to Plutrex AI, LEVI has a Buy rating (75.5/100). For the full analysis including trading plan and risk assessment, see the detailed breakdown above.
How can I invest in LEVI?
US stocks like LEVI can be bought through international brokers such as Interactive Brokers, accessible to Arab investors. Plutrex provides comprehensive analysis plus AI-generated trading plans with entry points, stop losses, and profit targets.
What are the main risks of investing in LEVI?
Plutrex AI identifies the main risks for LEVI by analyzing valuation, debt, market sentiment, and macro factors. See the Risk Assessment section above for the full breakdown.