Is The Market Pricing Tupperware Fairly?
Tupperware Brand Corporation’s (NYSE:TUP) stock price increased by around 20% and revenue grew 2% in 2017. Increased promotional offers in the established markets drove the average prices and consequently, revenues, down in these regions and offset the growth from increased revenues in the emerging markets. Additionally, the company’s decision to wind down Beauticontrol also put pressure on the top-line in 2017.
We have created an interactive dashboard analysis to estimate Tupperware’s valuation based on its expected revenues for FY 2018. You can make changes to these variables to arrive at your own price estimate for the stock.
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We have arrived at a $67.13 price estimate for Tupperware based on revenue projections of $2.26 billion for 2018, a P/S multiple of 1.51, which is slightly higher than that for 2017, but still lower than the industry average, and a share count of 50.9 million. The market price stood at $48.61 as of March 16, which is significantly below our price estimate.
Tupperware generates revenue from four segments: North America, South America, Asia Pacific, and Europe.
Emerging markets such as parts of South America and Asia Pacific drove revenue in 2017 and have continued to increase their share of the overall revenue (from 66% in 2015 to 69% in 2017). However, Indian markets saw a downfall due to the implementation of the Goods and Service Tax. With a greater workforce across these regions, we expect further growth in revenue.
The company’s decision to wind down Beauticontrol due to a history of declining sales and increased competition in the direct selling channel, and the retail sector for beauty and personal care products in established markets such as parts of North America and Europe, had a negative impact on the revenue. However, greater sales force and promotional activities drove sales volumes and managed to offset a part of the losses. The shutdown of Beauticontrol will impact the top-line in the near term.
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