Bear of the Day: Tupperware (TUP)

Tupperware Brands Corporation (TUP) is a multi-brand, multi-category, relationship-based sales company. It primarily manufactures and sells preparation, storage, and serving solutions for the kitchen and home.

The company made its debut in 1946 and has now expanded its presence in almost 100 countries around the world.  Its sales force consists of independent contractors who market products directly to consumers.

As the company derives about 70% of its sales from emerging markets, it is a play on the growing middle class with rising incomes in these countries.

Lackluster Results and Guidance

GAAP net income was $35.7 million down from $47.4 million in 2017. Adjusted, diluted earnings per share were $0.91, 10-cents below the low-end of the their guidance range but slightly ahead of the Zacks Consensus Estimate of $0.88.

Established market sales decreased 12% (and 19% local currency), while emerging markets, were up 3% (1% local currency), thanks mainly to growth in China.

"Due to our soft result on the top-line, as well as a higher tax rate, adjusted earnings per share in the first quarter was 10-cents below the low-end of our January guidance range and 16% below the prior year in local currency,” said the CEO.

Tupperware Brands Corporation Price, Consensus and EPS Surprise

Tupperware Brands Corporation Price, Consensus and EPS Surprise | Tupperware Brands Corporation Quote

The Bottom Line

The stock is down about 28% this year but a Zacks Stock Rank #5 (Strong Sell) and Industry and Sector Ranks in the bottom 18% and 6% respectively, suggest continued underperformance.

Further, while the stock looks attractive in terms of valuation and dividend yield, the company could face headwinds due to the rising dollar as it derives about 90% of its sales outside the United States

For the time being, investors may like to avoid the stock.

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