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Tupperware Brands

TUP

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Earnings momentum for Tupperware Brands Corporation (TUP - Snapshot Report) has increased in the past week following its strong third-quarter 2012 results and upbeat outlook. This well-known maker of food storage containers and home products continues to experience strength in emerging markets, which represents roughly 66% of its sales.

This Zacks #2 Rank (Buy) offers a solid dividend yield of 2.5% and is expected to deliver double-digit earnings growth this year and beyond, leveraging a strong brand and higher demand from the burgeoning middle class of the Asia-Pacific.

Stellar Third Quarter

On October 24, Tupperware announced that third-quarter profit more than quadrupled year over year to $47.5 million or 85 cents per share. Adjusted earnings of 95 cents per share, which exclude one-time items, topped the Zacks Consensus Estimate by more than 5.5%. The results were helped by strong performances in the emerging markets of Asia-Pacific.

Revenues, however, dipped 1.4% year over year to $594.4 million due to unfavorable currency translation impact. Excluding the currency impact, sales rose 6% in the quarter.

Sales in Asia-Pacific climbed 10% on a reported basis to $197.5 million with strong growth registered across Indonesia (up 30%) and India (up 50%). China and Malaysia posed double-digit growth in the quarter. The growing middle class is driving the demand for the company’s storage and other products in the region.

But Tupperware saw lower sales from Europe and North America in the third quarter. Revenues from Latin America rose 7% with sales from both Brazil and Venezuela surging 30%.

Tupperware raised its full-year 2012 earnings guidance to between $4.94 and $4.99 per share from its earlier view of $4.81 to $4.91, and expects local currency sales growth of 5% for the year. For the fourth quarter, the company anticipates earnings between $1.66 and $1.71 per share and expects sales growth of 5% to 7% in local currency.

Earnings Momentum Cruising

For 2012, the Zacks Consensus Estimate has risen up by 1.4% to $4.96 in the past 7 days, as 8 of 9 estimates moved higher. The estimate for 2012 indicates a projected annualized growth of roughly 11.4%.

For 2013, the past week has seen 6 of 9 estimates revised upward, raising the Zacks Consensus Estimate by 1.3% to $5.54 per share. This reflects a projected year over year growth of around 11.7%.

Attractive Dividend Payout

Tupperware has been consistently paying dividends since it went public in 1996. The company last raised its quarterly dividend by 20% to 36 cents per share in February 2012. On August 20, Tupperware declared its most recent quarterly dividend, affirming a solid yield of 2.5%.

Reasonable Valuation

Tupperware’s valuation looks reasonable on a P/E basis. Shares are currently trading at a forward P/E of 11.73x, a slight discount to the peer group average of 11.83x. Moreover, its trailing twelve months P/E of 12.14x is lower than the peer group average of 12.50x. Tupperware also has a 1-year ROE of 54.4%, which is well above its peer group average of 21.2%.

A Look at the Chart

Tupperware’s shares have bounced back sharply from as low as $11.40 in March 2009 to $58.16 as of October 26, 2012. Strong third quarter results contributed to the stock’s recent rally. The consistent growth in earnings estimates have pushed the stock higher, something which should draw investors’ attention.

With rising earnings estimates, a healthy growth trajectory, attractive dividend yield and decent valuation, Tupperware is a compelling pick for investors seeking growth and income.

Tupperware Brands Corporation makes and distributes a range of storage and serving solutions, kitchen cookware, microwave products and microfiber textiles under the Tupperware brand. It also offers beauty and personal care products as well as and nutritional products under a host of brands. The company, which has a market cap of $3.2 billion, markets its products directly through an independent sales force globally.


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