Levi Strauss & Co. (LEVI) Stock Analysis
Is LEVI a good investment?
Levi Strauss & Co. (LEVI) has a Plutrex AI rating of 74.5/100 as of July 11, 2026, indicating a Buy consensus. The stock is not classified as halal-compliant. Key strength: Exceptional profitability leadership: Gross margin 61.9% (39.9% above industry 51.44%), ROE 25.4% (162.3% above industry 9.69%), and net margin 7.31% (158.5% above industry 2.83%) — LEVI is the undisputed profitability champion in its peer group, reflecting durable brand pricing power. Main concern: Severe forward growth deficit vs. peers: Next-year EPS growth of 11.0% is 70.4% below the industry average of 37.1%, and 5-year EPS growth of 13.4% is 34.8% below industry 20.5% — LEVI is a materially slower grower than its peer group, which limits multiple expansion and makes the P/E discount partially justified rather than a true mispricing opportunity.
Investment Summary
Levi Strauss (LEVI) at $23.83 presents a classic 'quality compounder at fair value' setup — a premium brand with exceptional profitability metrics trading at a modest discount to peers, supported by a recent earnings beat and guidance raise, but constrained by below-average forward growth expectations. The bull case rests on three pillars: (1) Gross margin of 61.9% — extraordinary for apparel, 39.9% above the industry average of 51.44% — reflecting genuine brand pricing power; (2) ROE of 25.4%, a staggering 162.3% above the industry average of 9.69%, confirming this is a capital-efficient, high-quality business; and (3) Headline 'Levi Strauss beats quarterly expectations, raises guidance and dividend' — adjusted EPS of $0.28 beat the $0.24 consensus by 16.7%, and full-year guidance was raised, signaling management confidence. The bear case centers on forward EPS growth of only 11.0% next year and 13.4% over five years — 70.4% and 34.8% below industry peers respectively — meaning LEVI is a slower-growth compounder in a sector with faster-growing alternatives. The PEG of 1.05 (vs. industry 1.235) suggests the stock is fairly valued, not deeply discounted. Analyst consensus target of $28.20 implies 18.3% upside. Net verdict: A quality hold/buy for patient investors, not a high-conviction aggressive buy.
Key Strengths
- Exceptional profitability leadership: Gross margin 61.9% (39.9% above industry 51.44%), ROE 25.4% (162.3% above industry 9.69%), and net margin 7.31% (158.5% above industry 2.83%) — LEVI is the undisputed profitability champion in its peer group, reflecting durable brand pricing power
- Strong earnings beat and repeated guidance raises: Headline 'Levi Strauss beats quarterly expectations, raises guidance and dividend' — adjusted EPS $0.28 beat $0.24 estimate by 16.7%; 'Levi Strauss Raises Guidance Again' confirms management has high visibility into demand trajectory, reducing near-term earnings risk
- Attractive relative valuation with strong FCF: P/E of 19.58x is 20.7% below industry average 24.72x; PEG of 1.05 is 15% below industry 1.235; $545M annual FCF supports dividend growth, debt reduction, and buybacks — the stock is cheaper than peers on both absolute and growth-adjusted bases
Key Concerns
- Severe forward growth deficit vs. peers: Next-year EPS growth of 11.0% is 70.4% below the industry average of 37.1%, and 5-year EPS growth of 13.4% is 34.8% below industry 20.5% — LEVI is a materially slower grower than its peer group, which limits multiple expansion and makes the P/E discount partially justified rather than a true mispricing opportunity
- Tariff headwinds and EPS deceleration risk: News analysis flags 'Tariff headwinds identified as a key risk factor for future performance' — combined with the alarming deceleration from historical EPS growth of 32.6% to recent YoY EPS growth of just 1.4%, there is a real risk that the 13.4% five-year EPS growth projection proves too optimistic if tariff costs compress margins further, which would cause valuation multiple contraction from the current P/E of 19.58x
Plutrex 10-Factor AI Breakdown
Fundamental Analysis
Profitability is LEVI's crown jewel. Gross margin of 61.9% (vs. industry 51.44%) demonstrates pricing power that most apparel companies cannot replicate. Operating margin of 12.5% (vs. industry 9.86%) shows operational discipline, though the 49.4-point gap between gross and net margin reveals heavy SG&A overhead consuming value. Net margin of 7.31% (vs. industry 2.83%) — 158.5% above peers — confirms LEVI converts revenue to profit far more efficiently than competitors. ROE of 25.4% (vs. industry 9.69%) is the single most impressive metric, indicating exceptional capital allocation. On valuation, P/E of 19.58x sits 20.7% below the industry average of 24.72x, and PEG of 1.05 is 15% below the industry PEG of 1.235 — both suggesting modest undervaluation relative to peers. However, the forward growth deficit partially explains this discount: next-year EPS growth of 11.0% vs. industry 37.1% is a 70.4% shortfall that limits re-rating potential. Balance sheet carries D/E of 0.89 (better than industry 1.118) with $812M cash and $545M FCF — manageable but not pristine. The critical concern is the YoY EPS growth deceleration to just 1.4% from historical 32.6%, creating uncertainty about whether the 13.4% five-year EPS growth projection is achievable. Current implied EPS of approximately $1.22 ($23.83 / 19.58x P/E) growing at 11% yields ~$1.35 next year; at a fair 18-20x P/E, intrinsic value is $24-$27, with the analyst target of $28.20 representing the optimistic scenario.
News Sentiment
Levi Strauss is having a moment — and Wall Street is taking notice. The iconic denim brand just delivered a quarter that beat expectations and gave investors something they love: a raised outlook. The company reported adjusted earnings of $0.28 per share, topping analyst forecasts of $0.24 by nearly 17% — a meaningful beat that signals the brand's pricing power is holding up better than feared. But the real headline wasn't just the earnings beat. As reported across multiple outlets including 'Levi Strauss beats Q2 estimates, raises full-year outlook and dividend' and 'Levi Strauss Raises Guidance Again,' management didn't just meet the bar — they raised it. Twice. That kind of repeated guidance increase tells investors that demand is real, not a one-quarter fluke. The company also sweetened the deal by raising its dividend, rewarding shareholders directly. The Q2 earnings call highlighted the company's confidence in its revenue trajectory, with AI-driven improvements in inventory management and demand forecasting potentially helping margins. There is one cloud on the horizon, however: tariffs. Trade policy uncertainty poses a genuine risk to a global brand that manufactures across multiple countries. If tariff costs escalate, they could eat into the very margins that make Levi's so attractive. For now, though, the story is one of a classic American brand executing well, returning cash to shareholders, and giving investors reasons to feel good about the road ahead.
Risk Assessment
PRIMARY RISK: Tariff headwinds could compress gross margins from the current 61.9% level — even a 200-300bps compression would meaningfully impact the 7.31% net margin and threaten the 11% next-year EPS growth forecast. If EPS growth disappoints and comes in near the recent 1.4% YoY rate rather than the projected 11%, the P/E of 19.58x would look expensive and the stock could re-rate toward $20-21 (15-16x on flat earnings). SECONDARY RISK: The forward EPS growth deficit vs. peers (70.4% below industry next year) means capital could rotate to faster-growing apparel names, capping LEVI's multiple expansion. MITIGATION: The $812M cash position and $545M FCF provide a meaningful buffer against tariff cost absorption. The 16.7% EPS beat and guidance raise suggest management has already partially de-risked near-term estimates. Stop-loss at $20.80 (12.7% below entry) limits downside to a level that would imply a P/E of ~17x on current earnings — a reasonable floor for a business with 25.4% ROE and 61.9% gross margins. Position sizing at 3.0% reflects medium conviction appropriate for a quality-but-slow-growth compounder facing macro headwinds.
Related Halal Stocks
Related Stocks
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 74.5/100 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 (74.5/100). 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.