Levi Strauss & Co.
LEVI
$24.09
-1.23%
Levi Strauss & Co. designs, markets, and sells denim and casual apparel — jeans, pants, tops, shorts, skirts, jackets, footwear, and accessories — for men, women, and children under the Levi's, Dockers, Signature by Levi Strauss & Co., and Denizen brands, operating through Americas, Europe, and Asia segments with the Americas as the key revenue driver. As the inventor of the blue jean and a globally recognized heritage brand with roughly 19,000 employees, Levi's occupies a distinctive position as a denim category leader attempting to evolve from a wholesale-dependent apparel maker into a more vertically integrated, direct-to-consumer and digital-first brand. The current investor narrative centers on this strategic turnaround: management's DTC and eCommerce push is being credited with accelerating revenue growth, expanding margins, and supporting a dividend increase, while the most recent Q3 print delivered a significant earnings beat with broad-based revenue growth despite a slight top-line miss. Debate now hinges on whether the margin story is durable against a cautious consumer backdrop, tariff-related cost pressure across apparel, and competitive pressure from athleisure and value players — themes echoed in recent sector commentary questioning whether beaten-down apparel names are value traps or genuine buying opportunities.…
LEVI
Levi Strauss & Co.
$24.09
Related headlines
Investment Opinion: Should I buy LEVI Today?
Rating: Buy (moderate conviction). The thesis is that Levi's is a margin-driven turnaround trading at a discount to its own history — ~12.2x forward earnings on consensus EPS of $1.87492 against a $22.87 price — with seven of eight covering analysts Buy-equivalent, two neutral, and zero Sells, and a Q3 2026 gross margin of 66.21% versus 61.66% a year earlier proving the DTC/eCommerce mix shift is real. The core reasoning is that ~25% implied EPS growth (15.27x trailing versus ~12.2x forward) is achievable if gross margin holds near 66%, and at that multiple the market is paying little for that optionality.
Supporting evidence: (1) valuation — 15.27x trailing PE, 1.40x PS, 11.66x EV/EBITDA and 3.87x P/B are modest for a branded consumer company with a 61.7% gross margin and 25.37% ROE, and the current PE sits in the middle-to-lower part of a historical band that reached 25.2x as recently as Q2 2026; (2) growth — revenue rose 4.3% YoY to $1.6097 billion in Q3 2026 after 8.0% in Q2 and 14.1% in Q1, with consensus revenue of $7.394 billion; (3) profitability — gross margin expanded ~455bp YoY and operating margin rose to 13.81% from 10.85%; (4) cash — TTM FCF of $659.1 million implies a ~7.5% FCF yield that comfortably covers the $61.6 million quarterly dividend (2.41% yield, 36.8% payout); (5) sentiment — the EPS estimate spread is only ~8% ($1.80557–$1.95610), signaling high conviction rather than wide disagreement.
Risks and conditions: the biggest threats are a gross margin reversal toward the 61–62% range (Q1 2026 was 61.88%) driven by tariffs or a cautious consumer, a bottom line that already slipped to $168.6 million in Q3 2026 from $218.1 million despite higher revenue, and leverage of 1.01 D/E with volatile FCF ($44.3 million in Q3 versus $230.9 million in Q2). This Buy would upgrade to higher conviction if revenue growth reaccelerates above 8% while gross margin holds above 65%, and would downgrade to Hold if gross margin falls below 63% or if consensus EPS is cut below $1.80; a break below the $18.70 October low would argue for Sell. Verdict: fairly valued to modestly undervalued relative to its own history and cheap relative to its margin profile — not a deep-value bargain, but a reasonably priced turnaround with a defined downside.
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LEVI 12-Month Price Forecast
The forward view is constructive but not euphoric: LEVI offers ~25% implied EPS growth at ~12.2x forward earnings, backed by a gross margin that has climbed from 61.88% in Q1 2026 to 66.21% in Q3 2026 and a Street that is unanimously constructive with no Sells. The base case (55% probability, $23.50–$26.50) assumes consensus EPS of $1.87492 is met with gross margin holding above 63%, while the bull case (25%, $27.50–$30.00) requires margin durability near 66% plus a re-rating toward 14–15x. The bear case (20%, $17.00–$19.00) is a tariff-and-consumer margin reversal that retests the $18.70 October low. I would upgrade to high confidence if Q4 2026 gross margin holds above 65% with revenue growth back above 6%, and downgrade to neutral if gross margin slips below 63% or the stock breaks below $18.70.
Wall Street consensus
Eight analysts cover LEVI, and the sentiment is overwhelmingly bullish: the institutional ratings show seven Buy-equivalent calls (TD Cowen Buy, BTIG Buy, Barclays Overweight, B of A Buy, Needham Buy, JP Morgan Overweight, Raymond James Outperform, Jefferies Buy) against two neutral ratings (Wells Fargo Equal Weight, Citigroup Neutral) and zero Sells, giving a consensus recommendation firmly in Buy territory. The consensus EPS estimate is $1.87492 (range $1.80557–$1.95610) on average revenue of $7.394 billion (range $7.268B–$7.508B); against the current $22.87 price, the consensus EPS implies a forward PE of about 12.2x, and while no explicit average price target is provided in the data, the uniformly constructive ratings and the recent Q3 earnings beat suggest the Street sees meaningful upside from current levels. The consensus leans clearly bullish, with the neutral voices concentrated at the large banks (Citi, Wells Fargo) that typically anchor on near-term multiple rather than turnaround optionality. The target range implied by the EPS dispersion is relatively tight — $1.81 to $1.96, a spread of only about 8% — which signals strong conviction in the near-term earnings trajectory rather than wide disagreement. The high end of the EPS range ($1.95610) would require continued gross margin expansion toward the 66%+ level achieved in Q3 2026 and sustained DTC growth, while the low end ($1.80557) likely assumes some margin compression from tariffs or a softer consumer. Notably, the ratings are all reiterations dated October 8, 2026 (the Q3 earnings date) and surrounding days, with no downgrades in the visible history — a pattern of stable-to-improving sentiment. The main risk to the consensus is that the bullish calls are crowded and the stock has already rallied 17% in a month, leaving less room for disappointment; the tight EPS spread also means a single guidance cut could force broad target revisions.
Bulls vs Bears: LEVI Investment Factors
The bull case currently has stronger evidence: gross margin expansion of ~455bp year-over-year, a ~12.2x forward PE, a ~7.5% FCF yield, and unanimous analyst support with zero Sells form a coherent, data-backed turnaround narrative. The bear case rests on softer ground — 4.3% revenue growth is modest, but it is decelerating from a tougher comparison base rather than collapsing, and the net income dip is tax-driven rather than operational. The single most important tension is whether the gross margin story is durable: if DTC mix and pricing hold margins near 66%, the ~25% implied EPS growth justifies a re-rating from 12x; if tariffs or a cautious consumer compress margins back toward the 61–62% range, the forward EPS estimate of $1.87 becomes vulnerable and the crowded bullish consensus unwinds. Secondary but real is the leverage profile (D/E 1.01) and volatile working-capital-driven cash flow, which limit the cushion if the consumer weakens.
Bullish
- Gross margin expansion is dramatic: Gross margin rose to 66.21% in Q3 2026 from 61.66% a year earlier, extending a clear trajectory from 61.88% in Q1 and 62.68% in Q2. That ~455bp of year-over-year expansion reflects the higher-margin DTC/eCommerce mix shift and is the single strongest piece of evidence in the turnaround thesis.
- Forward PE of ~12.2x is cheap: Against the $22.87 price and consensus EPS of $1.87492, LEVI trades at roughly 12.2x forward earnings versus a 15.27x trailing PE, implying the market expects ~25% EPS growth. That multiple is modest for a branded consumer company with a 61.7% gross margin and 25.4% ROE.
- Unanimous Street support, zero Sells: All eight covering analysts are constructive — seven Buy-equivalent ratings (TD Cowen, BTIG, Barclays, B of A, Needham, JP Morgan, Raymond James, Jefferies) against two neutrals and no Sells. The EPS estimate spread is only ~8% ($1.80557–$1.95610), signaling high conviction in the near-term earnings path.
- Strong FCF and income support: TTM free cash flow of $659.1 million on an $8.82 billion market cap implies a ~7.5% FCF yield, comfortably funding the $61.6 million quarterly dividend (2.41% yield, 36.8% payout). The company also repurchased $231.1 million of stock in Q1 2026, signaling management confidence.
Bearish
- Revenue growth is only low-single-digit: Q3 2026 revenue grew just 4.3% year-over-year to $1.6097 billion, decelerating from 8.0% in Q2 and 14.1% in Q1. The margin story is carrying the thesis, but without a reacceleration in the top line, EPS growth depends almost entirely on further margin gains.
- Net income fell despite higher revenue: Q3 2026 net income of $168.6 million was below Q3 2025's $218.1 million even as revenue rose, driven by a higher tax rate ($51.5 million versus $34.2 million) and other items. Margin expansion is cleaner at the gross and operating lines than at the bottom line.
- Leverage flatters returns: Debt-to-equity of 1.01 and an equity multiplier near 2.87x mean the 25.37% ROE is partly leverage-driven rather than purely operational. The current ratio of 1.55 is adequate but not fortress-like for a cyclical apparel business.
- Volatile cash flow and working capital: Quarterly FCF swung from $230.9 million in Q2 to just $44.3 million in Q3 2026, with Q3 operating cash flow of $102.9 million hit by a $157.0 million working capital outflow. This timing dependence makes the dividend and buyback affordable rather than abundant.
LEVI Technical Analysis
LEVI is in a choppy but net-positive recovery trend: the stock is up 14.29% over the past year and 9.85% year-to-date, but the 180-day price series shows a clear peak-to-trough-to-rebound cycle rather than a clean uptrend. The shares hit a high of $25.53 on July 27, 2026, then fell to a low of $18.70 on October 9, 2026 — a 27.37% max drawdown — before rebounding to the current $22.87. That places the stock at roughly 64% of its 52-week range ($18.70–$25.53), meaning it has recovered most of the autumn selloff but is still about 10.4% below its high, a positioning that reflects improving momentum rather than overextension. Recent momentum is decisively positive and diverging from the medium-term trend: the stock is up 17.22% over the past month versus a 6.31% decline over three months, a sharp reversal that suggests the October low marked a durable bottom rather than a dead-cat bounce. Relative strength confirms the move is stock-specific rather than market-driven — LEVI outperformed SPY by 22.21 percentage points over the past month (SPY fell 4.99%) and by 4.70 points over the past year, though it lagged by 1.40 points over three months. Volume of roughly 2.49 million shares is moderate for a $8.8 billion market cap, and while no RSI is provided, a 17% one-month surge off a 27% drawdown is consistent with an early-stage momentum recovery that has not yet reached overbought extremes. Key levels are well defined: support sits at the $18.70 October low, with secondary support around $19.50–$20.00 where the stock consolidated in late September and early October, while resistance lies at the $25.53 July high, with an intermediate hurdle near $24.50–$25.00 where the stock repeatedly stalled in late July and early August. A breakout above $25.53 would confirm a new leg higher and validate the turnaround thesis, whereas a breakdown below $18.70 would signal the recovery has failed and reopen the downside; with no beta provided, the 27.37% max drawdown itself is the best volatility proxy, implying position sizing should assume materially higher drawdown risk than the broad market.
Beta
—
—
Max Drawdown
-27.4%
Largest decline past year
52-Week Range
—
Price range past year
Annual Return
+12.7%
Cumulative gain past year
| Period | LEVI Return | S&P 500 |
|---|---|---|
| 1m | +25.2% | -2.4% |
| 3m | +7.4% | -2.3% |
| 6m | +14.8% | +2.8% |
| 1y | +12.7% | +11.3% |
| ytd | +15.7% | +11.4% |
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LEVI Fundamental Analysis
Revenue is growing at a modest but improving pace: Q3 2026 (quarter ended August 30, 2026) revenue was $1.6097 billion, up 4.3% year-over-year from $1.5434 billion in Q3 2025, and the trailing four quarters total roughly $6.68 billion ($1.7425B + $1.5620B + $1.6097B + $1.7658B). The multi-quarter trend shows sequential stabilization — Q2 2026 revenue of $1.5620 billion grew 8.0% over Q2 2025's $1.4460 billion, while Q1 2026's $1.7425 billion grew 14.1% over Q1 2025's $1.5268 billion — though the deceleration in the YoY rate from Q1 to Q3 partly reflects seasonal mix and a tougher comparison base. The Q3 earnings release was described as a significant beat with broad-based growth, and the DTC/eCommerce strategy is the identified growth engine, but with no segment data provided the regional mix (Americas, Europe, Asia) cannot be decomposed; the key takeaway is that low-single-digit growth is sufficient to support the margin story but is not yet a reacceleration story. Profitability is solid and margins are expanding: Q3 2026 net income was $168.6 million (10.47% net margin) on gross profit of $1.0658 billion, a 66.21% gross margin that rose from 61.66% in Q3 2025 and 60.75% in Q4 2025, while operating income of $222.3 million produced a 13.81% operating margin versus 10.85% a year earlier. The gross margin trajectory is the standout — 61.88% in Q1 2026, 62.68% in Q2 2026, and 66.21% in Q3 2026 — consistent with the higher-margin DTC mix shift, and the 10.79% operating margin and 9.20% net margin reported in the valuation data confirm a structurally profitable business. One caveat: Q3 2026 net income of $168.6 million was below Q3 2025's $218.1 million despite higher revenue, reflecting a higher tax rate and other items, so the margin expansion is cleaner at the gross and operating lines than at the bottom line. The balance sheet and cash flow picture is healthy but not fortress-like: debt-to-equity is 1.01, the current ratio is 1.55, and TTM free cash flow is $659.1 million against an $8.82 billion market cap, implying an FCF yield of roughly 7.5% — strong for an apparel company and more than sufficient to fund the $61.6 million quarterly dividend (2.41% yield, 36.8% payout ratio). ROE of 25.37% is high, though it is flattered by leverage (equity multiplier near 2.87x), and quarterly FCF has been volatile — $44.3 million in Q3 2026 versus $230.9 million in Q2 2026 and $152.1 million in Q1 2026 — driven by working capital swings, with Q3 operating cash flow of $102.9 million reduced by a $157.0 million working capital outflow. Cash of $641.4 million against total debt implied by the 1.01 D/E ratio is manageable, and the company repurchased $231.1 million of stock in Q1 2026, signaling confidence, but the reliance on working capital timing and the leverage profile mean the dividend and buyback are affordable rather than abundant.
Quarterly Revenue
$1.6B
2026-08
Revenue YoY Growth
+4.3%
YoY Comparison
Gross Margin
66.2%
Latest Quarter
Free Cash Flow
$659100000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
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Valuation Analysis: Is LEVI Overvalued?
Because net income is positive ($168.6 million in Q3 2026 alone, with TTM EPS of $0.066 reported in the key metrics but a more representative quarterly EPS of $0.44), the PE ratio is the appropriate primary metric. The trailing PE is 15.27x versus a forward PE of just 0.087x as reported — a figure that is clearly a data artifact (it appears to be a PEG-style ratio mislabeled as forward PE, since the same 0.087 value appears as the PEG ratio) — so the more reliable forward signal comes from the analyst EPS estimate of $1.87492, which against the $22.87 price implies a forward PE of roughly 12.2x. That gap between 15.3x trailing and ~12.2x forward implies the market expects EPS growth of about 25%, consistent with the margin-expansion narrative and the Q3 beat. Against the sector, LEVI looks inexpensive: the PS ratio of 1.40x, EV/EBITDA of 11.66x, and PE of 15.27x are modest for a branded consumer company with a 61.7% gross margin and 25.4% ROE, and the 2.41% dividend yield adds income support. The PEG ratio of 0.087 (if taken at face value) would suggest extreme undervaluation relative to growth, but that figure is almost certainly distorted by the low trailing EPS base; the more defensible read is that LEVI trades at a discount to the broader apparel sector on earnings while carrying a premium on sales (PS 1.40x) that is justified by its brand strength and margin profile. Historically, LEVI's own PE band has ranged widely — from 9.5x in Q4 2024 and 10.2x in Q3 2025 to 25.2x in Q2 2026 and 91.3x in Q3 2024 (when earnings were depressed) — so the current 15.27x sits in the middle-to-lower portion of its own range, well below the 25x seen as recently as Q2 2026. Its PS ratio of 1.40x, however, is near the low end of its historical 3.7x–6.5x range, though that comparison is complicated by the different share-count and revenue bases in the historical data; on balance, the valuation does not embed heroic expectations, and the stock's 10.4% discount to its 52-week high alongside a 15x PE suggests the market is pricing in execution risk rather than euphoria.
PE
15.3x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 9x~35x
vs. Industry Avg
21.3x
Industry PE ~21.3x*
EV/EBITDA
11.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on the durability of the margin story and the leverage profile. Gross margin jumped to 66.21% in Q3 2026 from 61.66% a year earlier, but that ~455bp gain is the load-bearing element of the ~25% EPS growth implied by the 15.27x trailing versus ~12.2x forward PE gap — any reversal toward the 61–62% range seen in Q1 2026 (61.88%) would materially undercut the consensus $1.87492 EPS estimate. Net income actually fell to $168.6 million in Q3 2026 from $218.1 million a year earlier despite higher revenue, showing the bottom line is sensitive to tax and below-the-line items. Debt-to-equity of 1.01 and an equity multiplier near 2.87x mean the 25.37% ROE is leverage-flattered, and quarterly FCF swung from $230.9 million in Q2 to $44.3 million in Q3 on a $157.0 million working capital outflow, leaving the $61.6 million quarterly dividend dependent on cash-flow timing.
Market and competitive risks are dominated by valuation compression and sector sentiment. At 15.27x trailing and ~12.2x forward earnings, LEVI is not expensive versus its own history (25.2x in Q2 2026, 91.3x in Q3 2024), but the stock has already rallied 17.22% in a month and 22.21 percentage points ahead of SPY, so much of the near-term good news is priced in. The 27.37% max drawdown from the July $25.53 high to the October $18.70 low is the best available volatility proxy and implies materially higher drawdown risk than the broad market. Competitive pressure from athleisure and value players is real — recent commentary flagged Lululemon's declining sales and cautious consumer as a value-trap warning — and tariff-related cost pressure across apparel, echoed in TPR's fiscal 2027 outlook, threatens the very gross margin that underpins the thesis.
The worst-case scenario is a margin reversal colliding with a cautious consumer: tariffs bite into cost of revenue, DTC mix gains stall, gross margin retreats toward the 60.75% seen in Q4 2025, and the consensus $1.87 EPS gets cut, forcing the crowded seven-Buy consensus to revise targets downward. In that chain, the stock would likely retest the $18.70 October 2026 low, a decline of roughly -18% from the current $22.87, and a break below that level would reopen the downside toward the lower end of its historical PE band (9.5x–10.2x seen in Q4 2024/Q3 2025). Applying a 10x multiple to a haircut EPS of ~$1.70 would imply roughly $17, or about -26% from current levels — consistent with the 27.37% max drawdown already experienced this cycle.
FAQ
The most severe risk is gross margin reversal: the 66.21% Q3 2026 margin versus 61.66% a year earlier is the load-bearing input to the ~25% implied EPS growth, and a slide back toward the 61.88% Q1 2026 level would undercut the $1.87492 consensus EPS and force revisions across the seven-Buy consensus. Second is tariff and input cost pressure across apparel, the same dynamic flagged in TPR's fiscal 2027 outlook, which hits cost of revenue directly. Third is financial flexibility: debt-to-equity of 1.01, an equity multiplier near 2.87x flattering the 25.37% ROE, and volatile FCF ($44.3 million in Q3 2026 versus $230.9 million in Q2 on a $157.0 million working capital outflow) leave the $61.6 million quarterly dividend dependent on cash timing. Fourth is competitive and consumer risk — athleisure and value players pressuring DTC traffic, echoing Lululemon's declining-sales commentary — compounded by the fact that net income fell to $168.6 million in Q3 2026 from $218.1 million a year earlier despite higher revenue.
The 12-month forecast is split into three scenarios. The base case carries 55% probability with a $23.50–$26.50 range, assuming consensus EPS of $1.87492 is met, gross margin holds above 63%, and revenue grows 3–6% — a 12.5–14x forward multiple that retests but does not cleanly break the $25.53 July high. The bull case at 25% probability targets $27.50–$30.00, requiring gross margin durability near 66%, revenue growth back toward the 8% seen in Q2 2026, and a re-rating to 14–15x. The bear case at 20% probability targets $17.00–$19.00, driven by tariffs and a cautious consumer compressing margin toward 60.75% and cutting EPS to roughly $1.70 at a 10x multiple. The base case is most likely, and its key assumption is that the DTC/eCommerce mix shift keeps gross margin above 63% through the holiday quarter.
LEVI looks fairly valued to modestly undervalued on earnings and cheap relative to its own recent history. The trailing PE is 15.27x, but against the $22.87 price and consensus EPS of $1.87492 the forward PE is roughly 12.2x, implying the market expects about 25% EPS growth — a modest multiple for a branded consumer company with a 61.7% gross margin and 25.37% ROE. That 12.2x sits in the middle-to-lower portion of a historical band that reached 25.2x as recently as Q2 2026, and well above the 9.5x–10.2x troughs of Q4 2024 and Q3 2025. Supporting metrics are similarly unheroic: PS of 1.40x, EV/EBITDA of 11.66x, and P/B of 3.87x. The reported forward PE and PEG of 0.087 are data artifacts from a depressed trailing EPS base and should be disregarded. The market is pricing execution risk on the margin story, not euphoria — but it is also not paying a deep-value discount.
The risk/reward is moderately favorable but not exceptional at $22.87. On the upside, consensus EPS of $1.87492 implies ~12.2x forward earnings, and the base case of $23.50–$26.50 (55% probability) offers roughly 3–16% upside, with the bull case of $27.50–$30.00 (25%) offering 20–31% if gross margin holds near 66%. On the downside, the bear case of $17.00–$19.00 (20%) implies -17% to -26%, anchored by the $18.70 October 2026 low and the 27.37% max drawdown already experienced. Seven of eight analysts are Buy-equivalent with zero Sells and an EPS estimate spread of only ~8%, which supports conviction but also means the bullish view is crowded after a 17.22% one-month rally. It is a good buy for investors with a 12–18 month horizon who want a 2.41% dividend plus margin-driven EPS growth and can tolerate a retest of the high-teens; it is a poor entry for short-term traders chasing the recent momentum.
LEVI fits a medium-to-long-term holding period of at least 12–18 months rather than short-term trading. The company is in a mid-stage turnaround — revenue growing 4.3% YoY in Q3 2026 with gross margin expanding ~455bp — so the earnings compounding from the DTC mix shift needs several quarters to play out, and the 2.41% dividend at a 36.8% payout ratio rewards patience. Volatility is meaningful: the stock swung from a $25.53 July high to an $18.70 October low, a 27.37% max drawdown, and with no beta provided that drawdown is the best risk proxy, so position sizing should assume materially higher volatility than the broad market. Earnings visibility is decent given the tight ~8% analyst EPS spread, but the crowded seven-Buy consensus and 17.22% one-month rally argue against chasing. A reasonable approach is a staged entry, adding on pullbacks toward the $19.50–$20.00 support zone, with a review if gross margin breaks below 63% or the stock closes below $18.70.