TUPPERWARE BRANDS CORP. $49(New York symbol TUP; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 49.7 million; Market cap: $2.4 billion; Price-to-sales ratio: 1.7; Dividend yield: 5.6%; TSINetwork Rating: Above Average; www.tupperwarebrands.com) makes plastic food and beverage containers, as well as cosmetics and fragrances. It sells these products through 3.1 million independent dealers, which keeps its distribution costs down.
We made Tupperware our Stock of the Year in 2011 when it was trading at $47. The stock got as high as $97 in 2013, but has moved down since. That’s mainly because the company gets over 80% of its revenue from outside of North America, and the high U.S. dollar has hurt the contribution of its overseas operations.
Tupperware’s sales were flat at $2.6 billion in 2011 and 2012, but rose to $2.7 billion in 2013. Due to unfavourable exchange rates, sales fell to $2.6 billion in 2014, and to $2.3 billion in 2015. Without exchange rates, sales rose 3.5% in 2015.
Earnings fell 11.6%, from $218.3 million in 2011 to $193.0 million in 2012. Due to fewer shares outstanding, per-share earnings fell 3.7%, from $3.55 to $3.42.
The company’s earnings improved to $5.17 a share (or a total of $274.2 million) in 2013, but dropped to $4.20 a share (or $214.4 million) in 2014, and to $3.69 a share (or $185.8 million) in 2015. If you exclude unusual items, including a writedown of its Venezuelan operations, earnings per share fell 18.8% in 2015, to $4.37 from $5.38.
Tupperware continues to pay quarterly dividends of $0.68 a share, for an annualized yield of 5.6%. In 2015, the company paid out 62% of its earnings in dividends before unusual items, which is above its target of 50%.
Dividend seems sustainable
Tupperware expects its cash flow in 2016 will range from $225 million to $235 million. Even after $65 million in capital expenditures, it would still have around $165 million. That’s more than enough to cover its dividend payments, which totaled $138 million in 2015.
Tupperware now expects unfavourable currency rates to cut its earnings by $0.58 a share in 2016. As a result, it should earn between $4.07 and $4.17 a share this year. The stock trades at a low 11.9 times the midpoint of that range.
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