Tupperware Brands Corporation

TUP Details

Tupperware Brands Corporation (NYSE: TUP) is a multinational consumer goods firm that creates innovative, functional, and ecologically friendly products. TUP produces and distributes culinary, home storage, and cosmetic goods under its Tupperware brand. TUP sells its products in about 70 countries, primarily through independent distributors. 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:

• New Credit Facility: On November 23, 2021, TUP stated that it had raised USD 880 million in a new secured credit facility to refinance its current credit facilities. The new facility comprises a five-year USD 480 million Revolving Credit Facility and a five-year USD 400 million Term Loan with a LIBOR plus 200 basis point interest rate. The transaction lowers the company's cost of capital, extends its maturity, resets financial covenants to provide operating flexibility, and boosts liquidity by increasing revolver capacity.
• Launched Reusable Packaging: On November 01, 2021, TUP and TerraCycle, a zero-waste platform Loop, announced a partnership. TerraCycle collaborates with industry leaders to create zero-waste, long-lasting, and returnable packaging. For example, Tim Hortons, one of Loop's brand partners, commissioned TUP to generate a one-of-a-kind reusable packaging container solution.

9MFY21 Results:

• Growth in Revenues: TUP's net sales increased by 8.82% to USD 1.21 billion during 9MFY21 (ended September 25, 2021), compared to USD 1.11 billion during 9MFY20 (ended September 26, 2020).
• Experienced Net Losses: During 9MFY21, the company had 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 various currencies other than the US dollar, putting it at risk of currency fluctuations. The danger arises even if currency forward contracts have been employed to counteract price volatility. As a result, any negative exchange rate movement would be detrimental to the company's bottom line.

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 48.45% in the past nine months and is currently leaning towards the lower band of its 52-week range of USD 15.28 to USD 38.59. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 29.55, indicating an oversold zone. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 19.53.

Considering the correction in the stock price, new credit facility, growth in topline, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 15.76, down 3.37% as of November 26, 2021, 11:18 AM 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.