Does Levi Strauss' (NYSE:LEVI) Share Price Gain of 13% Match Its Business Performance?

By
Simply Wall St
Published
November 19, 2020
NYSE:LEVI

We believe investing is smart because history shows that stock markets go higher in the long term. But if when you choose to buy stocks, some of them will be below average performers. Unfortunately for shareholders, while the Levi Strauss & Co. (NYSE:LEVI) share price is up 13% in the last year, that falls short of the market return. We'll need to follow Levi Strauss for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

See our latest analysis for Levi Strauss

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Over the last twelve months Levi Strauss went from profitable to unprofitable. While some may see this as temporary, we're a skeptical bunch, and so we're a little surprised to see the share price go up. We might get a clue to explain the share price move by looking to other metrics.

Unfortunately Levi Strauss' fell 20% over twelve months. So the fundamental metrics don't provide an obvious explanation for the share price gain.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
NYSE:LEVI Earnings and Revenue Growth November 19th 2020

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

We're happy to report that Levi Strauss are up 14% over the year. While it's always nice to make a profit on the stock market, we do note that the TSR was no better than the broader market return of about 22%. Shareholders are doubtless excited that the stock price has been doing even better lately, with a gain of 53% in just ninety days. The very recent increase in the share price could be evidence that the narrative is changing for the better due to fundamental improvements. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 3 warning signs for Levi Strauss you should be aware of, and 1 of them makes us a bit uncomfortable.

We will like Levi Strauss better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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This article by Simply Wall St is general in nature. 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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