• If you are wondering whether Levi Strauss is fairly priced or if there is still value on the table, this article will walk you through what the current market price might be telling you.
• The stock recently closed at US$20.55, with returns of 3.4% over the last 7 days, a 3.5% decline over 30 days, a 1.3% decline year to date, and longer term returns of 14.7% over 1 year, 23.2% over 3 years, and 10.8% over 5 years.
• Alongside these moves, investors have been reacting to ongoing company updates and broader consumer sentiment around apparel brands. These factors can shift how much certainty the market places on future cash flows and brand strength. News around retail sector trends, competition among denim and lifestyle brands, and shifting consumer preferences provides helpful context for how the stock is being priced today.
• Right now Levi Strauss scores a full 6 out of 6 on our undervaluation checks. Next we will look at how different valuation approaches line up, and then finish with a way to interpret those numbers that can give you a clearer view of what the stock might be worth.

Approach 1: Levi Strauss Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model projects a company’s future cash flows and then discounts them back to today’s value, aiming to estimate what the entire business could 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 US$266.4 million, and analysts plus extrapolated estimates point to Free Cash Flow reaching US$937.6 million in 2035, with interim projections such as US$487.8 million in 2026 and US$620 million in 2028. Simply Wall St extrapolates beyond the explicit analyst horizon to build a full 10 year path of cash flows in this model.

Discounting these projected cash flows back to today results in an estimated intrinsic value of US$26.85 per share. Compared with the recent share price of US$20.55, this implies the stock is around 23.5% below that DCF estimate, which suggests the shares are currently priced at a discount to this cash flow based value.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Levi Strauss is undervalued by 23.5%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.

Approach 2: Levi Strauss Price vs Earnings

For a profitable company like Levi Strauss, the P/E ratio is a handy way to see how much investors are paying for each dollar of earnings. A higher or lower P/E often reflects what the market thinks about a company’s growth potential and risk, with faster growth or lower perceived risk usually supporting a higher “normal” P/E, and slower growth or higher risk pointing to a lower one.

Levi Strauss currently trades on a P/E of 15.98x. That sits below the Luxury industry average of 20.66x and below the peer group average of 23.61x, so the stock is priced at a discount to both those broad benchmarks on earnings.

Simply Wall St’s Fair Ratio for Levi Strauss is 18.92x. This is a proprietary estimate of what the P/E might be given the company’s earnings growth profile, profit margins, industry, market value and risk characteristics. That makes it a more tailored reference point than a simple comparison with industry or peer averages, which do not adjust for company specific factors. Compared with this Fair Ratio, the current P/E of 15.98x is lower, which points to the shares trading below that earnings based reference level.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Levi Strauss Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Levi Strauss with the numbers behind it. A Narrative is your story for the company, where you set out what you think could happen to its revenue, earnings and margins, then link that to a financial forecast and an estimated fair value. On Simply Wall St, within the Community page used by millions of investors, Narratives are an accessible tool that lets you compare your fair value with the current market price to help decide whether the stock looks attractive or not at any point in time. As new information such as earnings results or news is added, the Narrative updates automatically so your forecast and fair value stay in sync with the latest data. For Levi Strauss, one investor might build a Narrative that assumes stronger brand momentum and a higher fair value, while another might assume more modest progress and a lower fair value for the same stock.

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.