Levi Strauss & Co. (LEVI) Stock Analysis
Is LEVI a good investment?
Levi Strauss & Co. (LEVI) has a Plutrex AI rating of 75.0/100 as of October 01, 2026, indicating a Buy consensus. The stock is not classified as halal-compliant. Key strength: Profitability dominance: ROE 25.4% (134% above industry average 10.84%), gross margin 61.9% (+6.9pp vs. peers), net margin 7.31% (127.8% above industry 3.21%), FCF $575.4M (~7% FCF yield) — Levi is the undisputed earnings quality leader in apparel with a clear brand moat. Main concern: Structural forward growth deficit vs. peers remains the binding constraint: YoY EPS growth of only 1.4% requires a 7.7x step-up to reach the 10.9% next-year estimate with limited historical validation; revenue growth of 8.0% trails industry average 17.1% by 53%; 5-year EPS CAGR of 13.5% lags peer average 15.64% by 13.6% — this growth credibility gap rationally justifies the valuation discount and caps conviction at Medium.
Investment Summary
Levi Strauss (LEVI) at $19.70 presents a classic 'quality at a discount' investment case with a medium-conviction Buy rating. The stock trades at P/E 16.12x vs. industry average 22.43x (a 28.1% discount) and PEG 1.19 vs. peer average 1.92 (a 37.8% discount), despite commanding the highest profitability metrics in its peer group: gross margin 61.9% (+6.9pp vs. peers), net margin 7.31% (127.8% above industry average of 3.21%), and ROE 25.4% (134% above industry average of 10.84%). Free cash flow of $575.4M (~7% FCF yield) and cash of $977.8M provide strong capital return optionality. Analyst consensus target of $29.67 implies 50.6% upside. The binding constraints on conviction remain: (1) revenue growth of 8.0% trails industry average 17.1% by 53%, (2) YoY EPS growth of only 1.4% creates a credibility gap against the 10.9% next-year and 13.5% five-year EPS estimates, and (3) the cybersecurity breach remains an unresolved, unquantified liability. News flow is incrementally positive — CFO appointment signals leadership depth for the transformation, UBS flagging potential guidance raise, and digital/lifestyle expansion broadening the growth runway — but not transformative enough to override the structural growth deficit concern.
Key Strengths
- Profitability dominance: ROE 25.4% (134% above industry average 10.84%), gross margin 61.9% (+6.9pp vs. peers), net margin 7.31% (127.8% above industry 3.21%), FCF $575.4M (~7% FCF yield) — Levi is the undisputed earnings quality leader in apparel with a clear brand moat
- Deep valuation discount to peers despite superior fundamentals: P/E 16.12x vs. industry 22.43x (-28.1%), PEG 1.19 vs. peer average 1.92 (-37.8%), analyst consensus target $29.67 implying 50.6% upside — the cheapest quality name in the apparel group with the discount appearing excessive relative to profitability leadership
- Positive near-term catalysts: CFO appointment (John Vandemore) adds financial leadership depth supporting the transformation; UBS flagging 'Levi's could raise earnings guidance on stronger topline'; digital growth and lifestyle category expansion broadening the revenue runway; analyst sentiment score 76/100 reflects growing conviction in the reacceleration thesis
Key Concerns
- Structural forward growth deficit vs. peers remains the binding constraint: YoY EPS growth of only 1.4% requires a 7.7x step-up to reach the 10.9% next-year estimate with limited historical validation; revenue growth of 8.0% trails industry average 17.1% by 53%; 5-year EPS CAGR of 13.5% lags peer average 15.64% by 13.6% — this growth credibility gap rationally justifies the valuation discount and caps conviction at Medium
- Cybersecurity breach remains an unresolved regulatory and financial liability: prior headline 'Levi Strauss reveals cybersecurity breach amid wider wave of attacks' introduces GDPR/CCPA fines, remediation costs, and reputational risk that could pressure the already-thin 9.0% operating margin; given net margin of only 7.31%, even $50-100M in incremental breach costs would represent a meaningful ~1-2% net margin headwind — the risk persists as active and unquantified
Plutrex 10-Factor AI Breakdown
Fundamental Analysis
Levi Strauss demonstrates exceptional profitability fundamentals that rank first in its peer group across all margin and return metrics. Gross margin of 61.9% exceeds the industry average of 55.0% by 6.9pp, reflecting strong brand pricing power. Net margin of 7.31% is 127.8% above the industry average of 3.21%, the most decisive competitive advantage. ROE of 25.4% is 134% above the industry average of 10.84%, confirming capital efficiency leadership. However, operating margin of 9.04% — while 19.7% above peers — reveals ~52pp of gross profit consumed by SG&A/overhead, indicating the cost structure remains heavy. On the balance sheet: debt-to-equity of 0.89 is modestly better than the industry average of 1.009 but still carries meaningful leverage risk; cash of $977.8M and FCF of $575.4M provide strong coverage. The critical growth tension: YoY EPS growth of just 1.4% vs. next-year estimate of 10.9% (a 7.7x step-up required) and 5-year EPS CAGR of 13.5% vs. peer average 15.64%. Revenue growth of 8.0% is less than half the industry average of 17.1%. P/E of 16.12x for a 13.5% EPS compounder yields a PEG of 1.19 — fair-to-attractive territory, and significantly cheaper than peers at 1.92 PEG. Net debt position must be monitored, but FCF comfortably covers interest and dividend obligations.
News Sentiment
Levi's Is Making Moves — But Can the Iconic Jeans Brand Grow Fast Enough? San Francisco-based Levi Strauss & Co. is quietly executing a major transformation, and Wall Street is starting to pay attention. The denim giant, known for its iconic 501 jeans, is pushing aggressively into lifestyle apparel beyond its core jeans business — think broader wardrobe staples — while betting heavily on digital channels to drive the next chapter of growth. The company just appointed John Vandemore as its new Chief Financial Officer, a move analysts see as adding the financial firepower needed to support CEO Michelle Gass's ambitious transformation strategy. With leadership continuity at the top and fresh financial expertise coming in, the management team looks increasingly equipped to deliver on lofty earnings targets. Investors got a boost when UBS flagged that 'Levi's could raise earnings guidance on stronger topline' — a potential catalyst heading into the next earnings report. Analysts have also been revamping their forecasts ahead of Q3 earnings, with several previewing 'strong fundamentals at a fair price.' But not everyone is convinced. One notable headline warned that 'the valuation leaves little room for disappointment' — a fair caution for a company needing to nearly 8x its recent earnings growth rate to hit targets. The stock currently sits about 33% below where analysts think it should trade, implying serious upside if Levi can prove the growth story is real.
Risk Assessment
Primary risk: Growth credibility gap — if next-year EPS growth of 10.9% disappoints (given YoY baseline of only 1.4%), the stock could re-rate down to the 13-14x P/E range (~$16-17), representing ~15-18% downside from entry. Stop at $17.50 captures this risk. Secondary risk: Cybersecurity breach — unquantified GDPR/CCPA fines and remediation costs could shave 1-2% from the 7.31% net margin; with $977.8M cash and $575.4M FCF, Levi can absorb $50-100M in costs without balance sheet distress, but sentiment impact could be immediate. Tertiary risk: Macro/consumer spending slowdown — with D/E of 0.89, financial leverage amplifies downside in a revenue contraction scenario. Mitigants: (1) $977.8M cash and $575.4M FCF provide substantial buffer; (2) 61.9% gross margins and brand pricing power create resilience; (3) Analyst consensus at $29.67 with 50.6% upside provides meaningful margin of safety; (4) PEG 1.19 vs. peer average 1.92 limits downside re-rating risk relative to peers.
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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 75.0/100 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 (75.0/100). 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.