Tupperware Brands Corporation

TUP Details

Tupperware Brands Corporation (NYSE: TUP) is a global consumer goods company that develops innovative and environmentally responsible products. TUP produces and distributes culinary, home storage, and cosmetic products under the trademark name "Tupperware". It sells products primarily through its 3.2 million independent distributors in approximately 80 countries. Furthermore, through the direct-to-consumer channel, its products are sold directly to consumers by a separate sales force outside traditional retail outlets.

Latest News:

• Divestiture From Non-Core Assets: On December 15, 2021, TUP announced the sale and lease-back of its real estate assets in New Zealand related to its Nutrimetics beauty business. The deal included two warehouses and a manufacturing facility, netting NZD 20.5 million (USD 14 million) in gross revenues. This deal follows the recently completed sale of its remaining land in Central Florida, which was disclosed last month as part of its recovery plan strategy of divesting non-core assets.
• Global Sourcing Center Singapore: On December 09, 2021, TUP plans to construct a strategic global sourcing hub in Singapore to support the company's goal of expanding into new categories and channels to fulfil today's consumer demand.

9MFY21 Results:

• Growth in Revenues: TUP reported a YoY increase of 8.82% in net sales to USD 1.21 billion in 9MFY21 (ended September 25, 2021), from USD 1.11 billion in 9MFY20 (ended September 26, 2020), driven by growth in all geographies except the Asia Pacific region.
• Experienced Net Losses: During 9MFY21, the company reported a net loss of USD 5.2 million, compared to a net income of USD 90.4 million in 9MFY20.
• Decent Balance Sheet: As of September 25, 2021, the company had cash and cash equivalents of USD 123.8 million and total debt (including finance lease obligation) of USD 678.4 million.

Key Risks:

• Exchange Rate Fluctuation: TUP conducts business in many currencies other than USD, making it vulnerable to exchange rate fluctuations. Though it has taken currency forwards contract to mitigate the change in prices, still this risk persists. Any unfavorable movement in the exchange rates would harm the company's financials.

Valuation Methodology: Price/Earnings Per Share Based Relative Valuation

 (Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

TUP Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

TUP's stock price has fallen 44.78% in the past nine months and is currently leaning towards the lower band of its 52-week range of USD 13.28 to USD 37.39. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 41.44. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 17.73.

Considering the correction in the stock price, disinvestment in non-core assets, new sourcing facility, growth in topline, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 14.44, up 1.62% as of January 21, 2022, 01:45 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

Disclaimer

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