LEVI STRAUSS & CO (LEVI): what the price requires
At today's price, LEVI STRAUSS & CO (LEVI) is priced for +18.0% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/LEVI
Headline
| Field | Value |
|---|---|
| Ticker | LEVI |
| Company | LEVI STRAUSS & CO |
| Current price | $24.08/sh |
| Composition | Wholesale 51% / Direct-to-consumer (DTC) 49% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 7.7% |
| Operating margin today | 10.6% |
| Margin compression implied | -2.9pp |
| Implied growth | 18.0% |
| Multiple paid | 19x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9.8% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.7pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.74σ |
| cohort percentile (of 210 peers) | 53 |
| sustained it ~5 years at this level | 40% |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.42x | 5 | expensive |
| Earnings | 2.04x | 5 | expensive |
| Relative | 0.83x | 5 | justifies |
| Growth | 1.06x | 3 | expensive |
Families that justify the price: Relative, Growth Families that call it expensive: Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.5%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $22.67 | 1.06x | yes | FCF base $0.5B, growth 3% (input: historical growth), terminal g 3.0%, WACC 7.5%, 5yr projection |
| DCF Exit Multiple | Growth | $22.99 | 1.05x | yes | Exit EV/EBITDA: 13.0x / 15.0x / 17.0x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $28.94 | 0.83x | yes | P/E 22x (static sector reference · 2026-04), scenarios: 18.5x / 22.0x / 25.5x (bear / base = reference held flat / bull), EV/EBITDA 14x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $16.97 | 1.42x | yes | BV/sh $5.60, ROE (TTM) 28.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $30.16 | 0.80x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $17.24 | 1.40x | yes | Rev $6.5B, growth 3% (input: historical growth; tapered), Terminal P/S: 1.2x / 1.5x / 1.7x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $18.72 | 1.29x | yes | EPS $1.56, growth 2% (input: historical EPS growth), PEG=7.67 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $11.78 | 2.04x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.61B × (1−22%) / WACC 7.5% → EPV (no growth) |
| Residual Income | Asset | $25.60 | 0.94x | yes | BV $5.60 + 5yr PV of (ROE (TTM) 28.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $14.02 | 1.72x | yes | √(22.5 × EPS $1.56 × BVPS $5.60) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $22.23 | 1.08x | yes | EBITDA $0.74B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $8.95 | 2.69x | yes | FCF $474.4M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $6.81 | 3.54x | yes | SBC-adj FCF $0.40B (FCF $0.47B − SBC $0.08B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $50.34 | 0.48x | yes | EPS $1.56 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $3.01 | 8.00x | yes | BV $5.60 × (ROIC 4.1% / WACC 7.5%) |
| P/Sales Sector | Relative | $32.97 | 0.73x | yes | Revenue $6.50B × sector P/S 2.0x |
| PEG Fair Value | Relative | $58.50 | 0.41x | yes | EPS $1.56 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $16.86 | 1.43x | yes | EPS $1.56 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $238.4m |
| Net debt / NOPAT (after-tax) | 0.46x |
| Net debt / operating income (pre-tax) | 0.36x |
| Interest coverage | 13.8x |
| Share count CAGR (buyback) | -0.8% |
| Burning cash | no |
Bullet Takeaways
- Levi Strauss is shifting from a wholesale denim brand to a direct-to-consumer retailer of its own product, with DTC now about 52% of revenue and growing faster than the wholesale half.
- The balance sheet is conservative, net debt around a third of a year of operating income with interest covered comfortably, which gives the brand room to invest in stores and absorb tariff costs.
- Tariffs are the live pressure: gross margin held near 62% despite tariff headwinds, helped by pricing and lower promotions, and the next read is whether tariff rates and consumer demand let the company hit its raised full-year growth outlook.
Bull Case
Levi's balance sheet is the quiet enabler of its transformation, and it is in good shape. Net debt sits at about a third of a year of operating income, with interest covered more than thirteen times and liquid assets near $812 million. That conservative financing is what lets the company invest in its own stores and e-commerce, the higher-margin direct-to-consumer channel, without leaning on debt or starving the brand of capital. A 170-year-old apparel company with this little leverage can fund a channel shift through a soft consumer environment, which is exactly when weaker, more indebted brands have to pull back.
The transformation itself is working. Direct-to-consumer revenue rose 16% as reported to $911.5 million and now makes up about 52% of total revenue, with the company selling more of its product through its own stores and website rather than through wholesale partners who capture part of the margin. Selling directly means Levi keeps the retail markup, owns the customer relationship and data, and controls how the brand is presented. Gross margin held near 62% even against tariff pressure, supported by higher pricing and lower promotional activity, which is the pricing power a strong brand is supposed to have.
Management has a clear long-term frame for where this leads. The company states that its strategies "over the long term will set us up to deliver mid-single digit annual net revenue growth, reaching approximately $9 billion to $10 billion in total company net revenue" while growing profitability faster. It is returning capital along the way, retiring repurchased shares, and the share count is roughly flat. A well-financed iconic brand executing a margin-accretive shift to direct sales, with pricing power intact and a defined growth path, is the durable-compounder version of the apparel bet.
Bear Case
The structural truth a Levi holder has to sit with is that the multiple is pricing growth that the company has not yet consistently delivered. At about 18 times operating income, the price assumes operating profit grows roughly 18% a year for five years, while management's own long-term frame points to mid-single-digit revenue growth reaching $9 billion to $10 billion. There is a gap between what the price needs and what the company guides toward, and the burden is on the margin and the channel mix to close it. The conservative earnings-power methods already say the stock is expensive, sitting well below the price.
The core business is apparel, which is fashion-cyclical and fiercely competitive. Denim demand waxes and wanes with style cycles, and Levi competes against fast-fashion, premium denim specialists, and private-label programs at the same retailers it supplies. The direct-to-consumer shift improves margins but also raises Levi's fixed costs and operating risk: running stores means rent, staff, and inventory exposure that wholesale did not carry. When consumer spending on discretionary apparel softens, a retailer absorbs that more directly than a wholesaler does.
Tariffs are the immediate pressure on the thesis and they are outside Levi's control. Gross margin slipped 20 basis points to 61.9% on tariff headwinds, and the company's guidance assumes specific tariff rates on imports from China and the rest of the world; a change in those rates moves the math in either direction. The bear case is not that Levi is a weak brand; it is that the price already credits a growth and margin path that depends on the channel shift continuing to lift profitability, the consumer staying healthy, and tariffs not eating the gains, three things that have to go right together for an 18-times multiple to be defended.
Valuation
The price is making a moderate growth bet on Levi. At today's quote the shares trade around 18 times company-wide operating income, which inverts to an assumption that operating profit grows roughly 18% a year for five years. That sits above the mid-single-digit revenue growth management frames over the long term, so the price is leaning on the direct-to-consumer shift to lift margins faster than revenue grows, turning modest top-line growth into faster profit growth.
The methods split along the growth question. The relative-multiple lens and the forward-growth methods land near or above the current price, supporting the valuation if the DTC margin story plays out. The earnings-power methods, which capitalize current profit with no growth, sit below the price, which is the conservative read saying the stock is expensive without the growth. The asset-and-profitability methods land modestly below as well. The pattern is a within-range name where the forward methods supply the optimism and the static methods supply the caution; the spread between them is the durability of the margin expansion the channel shift is supposed to deliver.
Solvency is a clean strength and bounds the downside well. Net debt sits at about a third of a year of operating income, with interest covered more than thirteen times and liquid assets near $812 million. The company is not burning cash, and the share count is roughly flat with repurchased shares retired. That financial position is what lets Levi invest in its own retail and absorb tariff costs through a soft consumer patch without distress. The genuine downside variable is not the balance sheet but the combination of tariff rates and discretionary apparel demand; the price assumes both cooperate while the DTC mix keeps lifting margin, and the conservative methods are pricing the risk that they do not.
Catalysts
The first quarter of fiscal 2026 beat expectations and lifted the outlook. Net revenue rose nearly 14% reported, and about 9% organic, to $1.74 billion, with direct-to-consumer revenue up 16% reported to $911.5 million and now roughly 52% of the total. Organic DTC growth was 10% in the United States, 5% in Europe, and 16% in Asia, a broad-based shift toward selling its own product directly.
Margins held up against tariffs. Gross margin was 61.9%, down only 20 basis points despite tariff headwinds, cushioned by higher pricing and lower promotional activity. Management raised full-year fiscal 2026 reported net revenue growth guidance to 5.5% to 6.5% and organic growth to about 4.5% to 5.5%.
The key swing factor is tariffs. The guidance assumes specific U.S. tariff rates on imports from China and the rest of the world, and management noted it does not yet reflect potential tariff rollbacks that could help earnings later in the year. The near-term watch items are the direction of those tariff rates, the durability of DTC growth across regions, and whether gross margin holds near its current level as the channel mix continues to shift toward direct sales.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- CRI (Carter's, Inc.)
- (no filing in the citation store)
- COLM (COLUMBIA SPORTSWEAR COMPANY)
- (no filing in the citation store)
- GIII (G III APPAREL GROUP LTD /DE/)
- (no filing in the citation store)
- AS (Amer Sports, Inc.)
- (no filing in the citation store)
- UAA (UNDER ARMOUR, INC.)
- (no filing in the citation store)
- LULU (lululemon athletica inc.)
- (no filing in the citation store)
- GAP (GAP, INC)
- (no filing in the citation store)
- ANF (Abercrombie & Fitch Co.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Levi Strauss Q1 2026 earnings release, April 2026 · Levi Strauss FY2025 10-K, 2026 · Levi Strauss Q1 2026 earnings call, April 2026