TUPPERWARE BRANDS CORP. $54 (New York symbol TUP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 55.9 million; Market cap: $3.0 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.tupperwarebrands.com) gets 70% of its sales by making high-quality products for the home, including plastic food and beverage containers and children’s educational toys. The remaining 30% comes from its beauty-products division, which makes a wide range of cosmetics, bath oils and fragrances.

Markets beyond the U.S. supply 90% of the company’s sales. Its main brands include Tupperware, Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare and Nuvo.

Tupperware prefers to sell its goods through independent dealers instead of retail stores. This helps keep its distribution and marketing costs down. As well, it pays its dealers commissions instead of salaries, so they have a greater incentive to promote Tupperware’s goods. That means the company rarely needs to use costly discounts to spur its sales.

Tupperware now has 2.7 million dealers in over 100 countries. These dealers hold “Tupperware parties” in homes, offices and other locations to demonstrate products and take orders.

In 2011, Tupperware’s dealers held 21 million parties worldwide. That works out to over 57 parties a day. In addition to selling goods, Tupperware parties provide opportunities to recruit new dealers. As well, this approach makes it easier to increase sales in lessdeveloped countries with few stores or established distribution networks.

Besides parties, Tupperware uses the Internet, mailorder catalogues and television shopping programs to sell its products. That helps it reach customers who are unable to attend Tupperware parties.

Big gains from foreign markets

Tupperware’s sales rose 9.1%, from $2.0 billion in 2007 to $2.2 billion in 2008. Sales fell 1.6%, to $2.1 billion, in 2009, mainly because the high U.S. dollar lowered the value of Tupperware’s overseas sales. However, sales rebounded to $2.3 billion in 2010, and reached $2.6 billion in 2011.

Earnings jumped 93.0%, from $116.9 million in 2007 to $225.6 million in 2010. Earnings per share rose 88.8%, from $1.87 to $3.53, on more shares outstanding. The company’s earnings fell 3.2% in 2011, to $218.3 million, due to a writedown of goodwill and costs to close some plants; however, earnings per share rose to $3.55 on fewer shares outstanding. If you exclude all unusual items, Tupperware would have earned $273.3 million, or $4.45 a share, in 2011.

Most of these gains are due to growing prosperity in Asia and Latin America. More consumers in these regions can now afford to buy food in bulk, which is spurring demand for Tupperware’s containers. These consumers are also buying more of the company’s beauty products. As a result, emerging markets now account for 60% of Tupperware’s overall sales, up from 40% in 2007.

The company also gets about a third of its sales and earnings from Europe. Fears of a recession have hurt sales on the continent in the past few months. However, steady growth in countries like Germany, France and Turkey is offsetting slower sales in Russia and Eastern Europe.

New products play a big role

The company also continues to fuel its growth with new products, which typically provide 25% of its overall sales. In 2011, it spent $19.5 million (or 0.8% of its sales) on research. That’s up 9.6% from $17.8 million (or 0.8% of sales) in 2010.

The recent rise in the value of the U.S. dollar will put pressure on Tupperware’s sales and earnings growth. The company offsets its currency risk with a hedging program. It also buys most of its raw materials in its local markets.

However, Tupperware needs resins from oil to make most of its products, so it should get a boost from the recent drop in oil prices. In 2012, the company expects to spend $165 million on resins.

Tupperware’s long-term debt of $416.3 million is a low 14% of its market cap. It also holds cash of $105.7 million, or $1.89 a share.

The company is using its strong balance sheet to enhance shareholder value. Since May 2007, it has spent $677.7 million on share buybacks. It still has $522.3 million left on its current repurchase authorization, which expires on February 1, 2015.

As well, Tupperware recently raised its quarterly dividend by 20.0%, to $0.36 a share from $0.30. The new annual rate of $1.44 yields 2.7%.

New policy clarifies future dividends

The company now plans to set its dividend at the start of each year; it now aims to pay out 30% to 35% of its earnings in the previous year.

Tupperware will probably earn $5.00 a share in 2012. The stock trades at 10.8 times that figure. However, the company’s earnings could rise to $5.59 a share in 2013, which would give the stock a p/e ratio of just 9.7.

Tupperware is a buy.