Watch List: Tupperware

Good morning,

On this glorious morning of February first, I'd like to review TUP - Tupperware.


Current Portfolio

Industrial:
GE - General Electric

Telecommunications:
T - AT&T

Consumer Staples:
WMT - Walmart

Consumer Discretionary:
GPS - Gap Inc.
YUM - Yum! Brands Inc.




Why TUP?

When I'm looking for stocks that I feel my money would be worth investing in, the first place I start is by scanning the living space. I ask myself if there is anything in the apartment that I feel I would be at a loss without or would have to change some habits to otherwise be without but would still wish to have. This morning, my mind immediately went to the Tupperware that I packed the wife and I's lunches in. Although there are lots of people that don't use Tupperware, the products they produce are used multiple times a week in my household as they help us stretch the budget that much further. This then makes me think about what could happen if the economy decides to crash once more. People are destined to become more frugal or they will go into debt. This means they would be more likely to choose a brand like Tupperware which would in turn theoretically raise the earnings for the company and therefore it would be likely to raise the share price. The question then becomes whether they are a worthwhile company as it stands now to invest in.


Company Breakdown

Tupperware mainly deals in the production and sale of the Tupperware products that most of us arguably know and love. Other than the Tupperware product itself, they also deal in the area of cosmetics and personal care products. Their main focus still deals in their core product, Tupperware which helps to store and preserve food.


History

TUP has an interesting history with investors to say the least. Over the past five years, TUP has had an average EPS growth rate of 0.88%. Unfortunately, the company has had an average drop in revenue of 0.14%. Aside from our key points already noted, the company was rising in cash flow up until 2013 when suddenly it started to take a downward turn. Since then it has been dropping its cash flow seemingly like a rock. As for its dividend, the company has only had a steadily raising dividend payout for four years running even though they have a payout ratio of 61.7% which would beg the question as to why this hasn't been running longer.


Price

As of 2/1/2016, TUP is trading at a share price of $46.52. This is far down from its past high in early 2014 when they were up to $97.14/share. If we look at the short term, its 52-week moving average is $42.60-72.93 a share. The company currently shows a dividend yield of 6.23% which equates in an average payout of $2.72 which is paid quarterly. In addition to these numbers, the current P/E ratio is a decent 12.59x and the EPS remains at 3.69.


Conclusion

Tupperware appears to be a company to keep your eye on. Over the past five years the company has seen a historical high and now has dropped to a solid discount price. The company at a distance holds a strong product line and has a very recognizable name that I would argue holds a very good reputation. On paper however, the company needs to turn some things around and figure out how to increase the growth of its product rather than continuing to suffer. In short, I think Tupperware is a good company. I won't be placing my money on them any time soon but you can be sure that I will be keeping my eye on them to see if they can turn things around as the product is fantastic and I would love to see this company make a run for it.