Levi Strauss & Co
NYSE:LEVI
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Intrinsic Value
The intrinsic value of one LEVI stock under the Base Case scenario is 26.61 USD. Compared to the current market price of 16.86 USD, Levi Strauss & Co is Undervalued by 37%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Levi Strauss & Co
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Fundamental Analysis
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Levi Strauss & Co., an iconic American apparel brand, traces its roots back to 1850 when German immigrant Levi Strauss introduced durable denim jeans to the gold miners of California. Over the decades, the company evolved into a global leader in the apparel industry, particularly known for its flagship Levi's brand, which remains synonymous with high-quality denim. Today, Levi Strauss continues to innovate while staying true to its heritage, responding adeptly to shifting consumer preferences towards sustainability and modern fashion. With a commitment to ethical practices, including eco-friendly materials and fair labor conditions, the company not only elevates its brand reputation but also...
Levi Strauss & Co., an iconic American apparel brand, traces its roots back to 1850 when German immigrant Levi Strauss introduced durable denim jeans to the gold miners of California. Over the decades, the company evolved into a global leader in the apparel industry, particularly known for its flagship Levi's brand, which remains synonymous with high-quality denim. Today, Levi Strauss continues to innovate while staying true to its heritage, responding adeptly to shifting consumer preferences towards sustainability and modern fashion. With a commitment to ethical practices, including eco-friendly materials and fair labor conditions, the company not only elevates its brand reputation but also appeals to a growing demographic of socially conscious consumers.
As an investor, understanding Levi Strauss & Co.’s market positioning provides key insights into its potential for growth. The company has effectively leveraged its legacy while tapping into emerging trends, such as the increasing demand for casual wear intensified by the pandemic. Revenue is driven not just by robust retail strategies, but also through a burgeoning direct-to-consumer channel, enhancing margins and customer engagement. With a stable financial foundation, a promising portfolio that includes other brands like Dockers and the expanding 511 and 721 lines, and ongoing strategic investment in brand and digital marketing, Levi's positions itself as a solid contender in the competitive apparel landscape.
Levi Strauss & Co. operates primarily through three core business segments, which focus on distinct markets and product categories:
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Levi's Brand: This is the flagship segment of the company, which includes the iconic Levi's jeans and denim products. The brand is recognized worldwide and offers a wide range of products, including casual wear, jackets, and accessories. The Levi's brand targets a broad demographic and emphasizes classic American style, quality craftsmanship, and sustainability.
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Dockers Brand: This segment focuses on the Dockers brand, which is known for its khaki pants and casual wear. Dockers targets a more business-casual market, appealing primarily to men looking for versatile clothing options suitable for both work and leisure. The brand emphasizes comfort, style, and practicality.
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Other Brands: This segment encompasses various brands owned by Levi Strauss & Co., such as denizen and Signature by Levi Strauss & Co. These brands often target specific customer segments or regions, offering more affordable options than the core Levi's and Dockers lines, which aim to reach a broader consumer base.
Additionally, Levi Strauss & Co. has made significant strides in sustainability and innovation within each segment, focusing on eco-friendly materials and responsible production practices to appeal to increasingly environmentally conscious consumers. The company's diverse portfolio allows it to adapt to changing market trends and consumer preferences.
Levi Strauss & Co. possesses several unique competitive advantages that help distinguish it from rivals in the apparel industry, particularly in the denim market:
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Brand Heritage and Recognition: Founded in 1853, Levi's is one of the oldest and most recognizable brands in the world. Its history and heritage of quality denim, particularly the iconic 501 jeans, create a strong emotional connection with consumers.
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Strong Intellectual Property: Levi Strauss & Co. holds various patents and trademarks related to its denim products, including design elements like the two-horse brand and the use of rivets. This protects its unique styles and branding from being easily replicated by competitors.
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Quality and Innovation: The company is known for its commitment to quality and innovation, regularly introducing new fits, washes, and sustainable practices (e.g., the use of water-saving techniques and organic materials), which appeal to environmentally conscious consumers.
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Diverse Product Range: While known for jeans, Levi's has a wide array of products, including jackets, shorts, and other apparel, allowing it to cater to various customer preferences and expand its market presence.
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Global Reach: Leveraging a robust distribution network, Levi's has a significant global presence, making its products available in multiple markets, which can lead to economies of scale.
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Loyal Customer Base: Levi's enjoys a dedicated customer base that is often brand loyal, leading to repeat purchases. This loyalty is supported by the company's strong community engagement and marketing efforts.
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Sustainability Initiatives: With increasing consumer focus on sustainability, Levi's has pushed towards sustainable practices (such as using less water in production and promoting recycling programs) that enhance its brand image and appeal to socially conscious consumers.
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Cultural Relevance: Over the years, Levi's has effectively positioned itself in various cultural movements and trends, from the American frontier spirit to rock 'n' roll in the 60s and beyond, maintaining a contemporary image.
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Retail Experience: Levi's invests in creating an engaging retail experience, both in-store and online. The company emphasizes direct-to-consumer sales, allowing for better margins and closer relationships with consumers.
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Strategic Partnerships and Collaborations: Collaborations with designers, celebrities, and influencers help revitalize interest in the brand and expand its reach into new demographics.
These advantages collectively create a strong competitive position for Levi Strauss & Co., allowing it to maintain profitability and market leadership in the challenging apparel landscape.
Levi Strauss & Co. faces several risks and challenges that could impact its business in the near future. Some of these include:
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Supply Chain Disruptions: Ongoing global supply chain issues, exacerbated by the COVID-19 pandemic and geopolitical tensions, can affect the availability of materials and the production timelines of products.
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Changing Consumer Preferences: The fashion industry is subject to rapidly changing trends. Consumers may shift towards more sustainable, inclusive, or technologically advanced apparel, which could challenge Levi's to adapt its product lines accordingly.
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Competition: Increased competition from both established apparel brands and emerging direct-to-consumer companies poses a threat. These competitors may offer similar products at lower prices or have more agile supply chains.
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Economic Downturns: Economic instability or recessions can lead to reduced consumer spending. Levi Strauss & Co. could face decreased sales if consumers prioritize essentials over discretionary clothing purchases.
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Sustainability Pressures: As consumers become more environmentally conscious, Levi's will be challenged to meet sustainability targets. Failing to address these concerns could harm the brand's reputation and sales.
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Global Expansion Risks: As Levi's expands into new international markets, it faces risks related to regulatory compliance, cultural differences, and local competition.
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E-commerce and Technological Advancements: The need to strengthen online sales capabilities and digital marketing strategies is critical. The failure to effectively engage consumers online could limit Levi's growth potential.
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Brand Reputation Management: Social media amplifies consumer voices, making it crucial for Levi's to maintain a positive brand image. Missteps or controversies can lead to significant public backlash.
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Labor Issues: Challenges regarding labor practices in its supply chain could impact operations and brand reputation. Compliance with fair labor practices is increasingly scrutinized by consumers and activists.
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Inflation and Cost Management: Rising costs of raw materials and production due to inflation can impact margins. The ability to manage pricing without alienating customers is essential.
To navigate these risks, Levi Strauss & Co. will need to remain flexible, innovate continually, and align its business strategy with emerging consumer trends and market conditions.
Revenue & Expenses Breakdown
Levi Strauss & Co
Balance Sheet Decomposition
Levi Strauss & Co
Current Assets | 2.7B |
Cash & Short-Term Investments | 577.1m |
Receivables | 679.5m |
Other Current Assets | 1.5B |
Non-Current Assets | 3.5B |
PP&E | 1.8B |
Intangibles | 479.2m |
Other Non-Current Assets | 1.2B |
Current Liabilities | 1.9B |
Accounts Payable | 667.8m |
Accrued Liabilities | 1.1B |
Short-Term Debt | 6.8m |
Other Current Liabilities | 132m |
Non-Current Liabilities | 2.4B |
Long-Term Debt | 1B |
Other Non-Current Liabilities | 1.4B |
Earnings Waterfall
Levi Strauss & Co
Revenue
|
6.2B
USD
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Cost of Revenue
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-2.5B
USD
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Gross Profit
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3.6B
USD
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Operating Expenses
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-3.1B
USD
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Operating Income
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495.3m
USD
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Other Expenses
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-340.3m
USD
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Net Income
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155m
USD
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Free Cash Flow Analysis
Levi Strauss & Co
USD | |
Free Cash Flow | USD |
In Q3, Levi Strauss & Co. achieved a 3% increase in net revenues, driven by a 5% global growth in the Levi's brand, marking its best quarterly performance in two years. Gross margins reached a record 60%, leading to a 250 basis points EBIT margin expansion. Looking ahead, the company anticipates mid-single-digit revenue growth for Q4, influenced by strong DTC performance, a new marketing campaign featuring Beyoncé, and strategic adjustments such as reviewing options for Dockers. The full-year EPS guidance is now projected at $1.17 to $1.27, with an anticipated gross margin expansion of 270 basis points.
What is Earnings Call?
LEVI Profitability Score
Profitability Due Diligence
Levi Strauss & Co's profitability score is 55/100. The higher the profitability score, the more profitable the company is.
Score
Levi Strauss & Co's profitability score is 55/100. The higher the profitability score, the more profitable the company is.
LEVI Solvency Score
Solvency Due Diligence
Levi Strauss & Co's solvency score is 56/100. The higher the solvency score, the more solvent the company is.
Score
Levi Strauss & Co's solvency score is 56/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
LEVI Price Targets Summary
Levi Strauss & Co
According to Wall Street analysts, the average 1-year price target for LEVI is 22.94 USD with a low forecast of 19.19 USD and a high forecast of 27.3 USD.
Dividends
Current shareholder yield for LEVI is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Profile
Country
Industry
Market Cap
Dividend Yield
Description
Levi Strauss & Co. engages in the design, marketing, and sale of apparel products. The company is headquartered in San Francisco, California and currently employs 16,600 full-time employees. The company went IPO on 2019-03-21. The firm offers a range of products, including jeans, casual and dress pants, activewear, tops, shorts, skirts, dresses, jackets, footwear and related accessories for men, women and children around the world. The firm operates through three geographical segments: the Americas, Europe, and Asia. Its Levi's Brands business, which includes Levi's, Signature by Levi Strauss & Co. and Denizen brands. Its other brands include Dockers and Beyond Yoga. The firm's products are sold in approximately 50,000 retail locations in more than 110 countries, including approximately 3,100 brand-dedicated stores and shop-in-shops. The company has approximately 1,083 Company-operated stores located in approximately 37 countries and approximately 500 Company-operated shop-in-shops. The remainder of its brand-dedicated stores and shop-in-shops are operated by franchisees and other partners.
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The intrinsic value of one LEVI stock under the Base Case scenario is 26.61 USD.
Compared to the current market price of 16.86 USD, Levi Strauss & Co is Undervalued by 37%.