Tupperware Brands Corp. (TUP, Financial) is a multi-level marketing company that focuses on household products. I’m bullish on the stock as I see a serious growth trajectory ahead.
Earnings preview and outlook
The company’s set to release its earnings before the market opens on Nov. 3. It’s anticipated that revenue will come in at $473.7 million and earnings per share at 71 cents.
Moving forward, I see robust macroeconomic support as a critical tailwind for Tupperware Brands.
By looking at consumers’ disposable income and the demand for household goods from a macroeconomic perspective, both data points suggest sound short to medium-term prospects.
Source: St. Louis Federal Reserve.
Source: St. Louis Fed.
A few corporate events should also assist the company and its stock. Tupperware is in a restructuring phase where it’s decided to spin off non-core assets.
The most notable of its deals will be the divestment of House of Fuller. By selling its beauty business in Mexico, the company will free up cash and reduce unnecessary liabilities.
According to the company, it’s ready to spend its capital on digitalization and recruiting new talent. Expanding into new high-growth channels is also said to be a priority.
Divestments usually boost a stock’s price, so if the capital gets reinvested into projects with good capital expenditure-to-sales ratios, we should see robust growth for the company.
Year-over-year Ebitda growth of 128.79% and operating cash flow growth of 11.75% simultaneously indicate investors have been experiencing good value for their investment lately.
Tupperware’s stock is experiencing rapid growth in diluted earnings per share as net income improved by 804.4% in 2020. This metric is often a leading indicator of stock price, and the recent divergence suggests a value gap may be present.
The stock’s multiples attain to that. Tupperware is a stock trading below its five-year average price-earnings ratio by 14.55%. The stock also trades below its five-year average price-sales ratio by 23.95%. These two combined suggest Tupperware is undervalued relative to its historical metrics.
Shares of Tupperware have lost nearly a third of their value year to date, but it is set to find support from macroeconomic factors and company restructuring. The stock is currently undervalued according to certain key metrics.