- Wondering if Levi Strauss shares at around US$18.43 are giving you genuine value or just the comfort of a familiar brand name? This article focuses squarely on what that current price might imply.
- The stock has seen a mixed return profile, with a 19.4% decline over the last 30 days and an 11.5% decline year to date, but a 17.8% gain over the past year and 14.5% annualized over three years. These figures can shape how investors think about both potential and risk.
- Recent coverage has focused on Levi Strauss as a long established consumer brand listed on the NYSE under the ticker LEVI. This keeps attention on how the business is being valued in the public market and helps frame the recent share price moves less as isolated swings and more as part of an ongoing debate about what the company is currently worth.
- On Simply Wall St's 6 point valuation checklist, Levi Strauss scores a full 6 out of 6. Next you will see how standard valuation approaches line up with that score and then finish with a broader way to think about the stock's value.
Approach 1: Levi Strauss Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model takes estimates of a company’s future cash flows and discounts them back to today using a required return, to arrive at an estimate of what the business might be worth right now.
For Levi Strauss, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month Free Cash Flow is about $266.4 million. Analysts provide forecasts for the next few years, and Simply Wall St then extends those projections further. By 2035, the model is using an extrapolated Free Cash Flow figure of about $925.3 million, with each future year discounted back to today in dollars.
Adding those discounted cash flows together and including a terminal value produces an estimated intrinsic value of about $26.90 per share. Against a current share price of around $18.43, the DCF suggests Levi Strauss is roughly 31.5% undervalued.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Levi Strauss is undervalued by 31.5%. Track this in your watchlist or portfolio, or discover 58 more high quality undervalued stocks.
Approach 2: Levi Strauss Price vs Earnings
For profitable companies like Levi Strauss, the P/E ratio is a useful way to connect what you pay per share with the earnings the business is currently generating. It gives you a quick sense of how many dollars investors are paying for each dollar of earnings.
What counts as a “normal” or “fair” P/E ratio often reflects how the market views a company’s growth potential and risk. Higher expected growth or lower perceived risk can support a higher multiple, while lower growth or higher risk tends to justify a lower one.
Levi Strauss currently trades on a P/E of about 14.12x, compared with an industry average of roughly 18.54x for the Luxury group and a peer average of about 18.19x. Simply Wall St also estimates a Fair Ratio of around 20.65x for Levi Strauss. This Fair Ratio is a proprietary view of what the P/E might be given factors such as earnings growth, industry, profit margins, market cap and specific risks.
Because it blends these company specific drivers, the Fair Ratio can be more tailored than a simple comparison with peers or the broad industry. When set against the current P/E of 14.12x, the Fair Ratio of 20.65x indicates that the shares are trading below that measure of value.
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, so this is where Narratives come in, giving you a simple story based on your view of Levi Strauss that connects your assumptions for future revenue, earnings and margins to a clear Fair Value that you can compare with the current price.
A Narrative on Simply Wall St is your version of the Levi Strauss story tied directly to a forecast, so instead of just looking at a P/E of 14.12x or a single Fair Ratio, you see how your expectations for the business lead to a specific Fair Value and whether that points to the shares being above or below your own number today.
These Narratives are easy to use within the Community page on Simply Wall St, where millions of investors share different views, and they update automatically when new earnings, news or guidance are added, so your Fair Value view keeps moving with the latest information rather than sitting as a one off calculation.
For Levi Strauss, one investor might anchor on a Fair Value close to the more optimistic analyst work around US$32.11 to US$33.00, another might lean toward a more cautious Fair Value near US$23.00, and by setting up each Narrative you can see in one place how those different stories and assumptions translate into different Fair Values, and what that gap versus the current price could mean for your own buy, hold or sell timing.
Do you think there's more to the story for Levi Strauss? Head over to our Community to see what others are saying!
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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