With this article we are going to examine Tupperware Brands
Corp (
TUP
) through the lens of FAST Graphs? - fundamentals analyzer
software tool - which shows a picture of a stock that appears
currently undervalued. This might be a good time for the prudent
dividend investor to do further due diligence into this company
for possible addition to their portfolio.
About Tupperware Brands Corp: Directly
from their website
"Tupperware Brands Corporation is a portfolio of global
direct selling companies, selling innovative, premium products
across multiple brands and categories through an independent
sales force of 2.7 million. Product brands and categories include
design-centric preparation, storage and serving solutions for the
kitchen and home through the Tupperware brand and beauty and
personal care products for consumers through the Armand Dupree,
Avroy Shlain, BeautiControl, Fuller Cosmetics, NaturCare,
Nutrimetics, and Nuvo brands."
Earnings Determine Market Price: The following earnings and price
correlated FAST Graphs? clearly illustrates the importance of
earnings. The Earnings Growth Rate Line or True Worth? Line
(orange line with white triangles) is correlated with the
historical stock price line.
On graph after graph the lines will move in tandem. If
the stock price strays away from the earnings line (over or
under), inevitably it will come back to earnings.
Earnings & Price Correlated
Fundamentals-at-a-Glance
A quick glance at the historical earnings and price correlated
FAST Graphs? on Tupperware Brands Corp shows a picture of
undervaluation based upon the historical earnings growth rate of
8.8% and a current PE of 11.8. Analysts are forecasting the
earnings growth to continue at about 12.5%, and when you look at
the forecasting graph below, the stock appears undervalued, (it's
trading below the orange earnings justified valuation line).
Tupperware Brands Corp: Historical Earnings, Price,
Dividends and Normal PE Since 1998
Performance Table Tupperware Brands Corp
The associated performance results with the earnings and price
correlated graph, validates the principles regarding the two
components of total return; capital appreciation and dividend
income. Dividends are included in the total return calculation
and are assumed paid, but not reinvested.
When presented separately like this, the additional rate of
return a dividend paying stock produces for shareholders becomes
undeniably evident. In addition to the 4.9% capital appreciation
(green circle), long-term shareholders of Tupperware Brands Corp,
assuming an initial investment of $1,000, would have received an
additional $460.61 in dividends (blue highlighting) that
increased their total return from 4.9% to 6.3% per annum versus
4.1% in the S&P 500.
The following graph plots the historical PE ratio (the dark blue
line) in conjunction with 10-year Treasury note interest. Notice
that the current price earnings ratio on this quality company is
as normal as it has been since 1998.
A further indication of valuation can be seen by examining a
company's current price to sales ratio relative to its historical
price to sales ratio. The current price to sales ratio for
Tupperware Brands Corp is 1.22 which is historically high.
Looking to the Future
Extensive research has provided a preponderance of conclusive
evidence that future long-term returns are a function of two
critical determinants:
1. The rate of change (growth rate) of the company's earnings
2. The price or valuation you pay to buy those earnings
Forecasting future earnings growth, bought at sound
valuations, is the key to safe, sound, and profitable
performance.
The Estimated Earnings and Return Calculator Tool is a simple yet
powerful resource that empowers the user to calculate and run
various investing scenarios that generate precise rate of return
potentialities. Thinking the investment through to its logical
conclusion is an important component towards making sound and
prudent commonsense investing decisions.
The consensus of 10 leading analysts reporting to Capital IQ
forecast Tupperware Brands Corp's long-term earnings growth at
12.5% (orange circle). Tupperware Brands Corp has medium
long-term debt at 45% of capital (red circle). Tupperware Brands
Corp is currently trading at a P/E of 11.8, which is below the
value corridor (defined by the five orange lines) of a maximum
P/E of 18. If the earnings materialize as forecast, Tupperware
Brands Corp's True Worth? valuation would be $130.95 at the end
of 2017 (brown circle on EYE Chart), which would be a 19.3%
annual rate of return from the current price (yellow
highlighting).
Earnings Yield Estimates
Discounted Future Cash Flows: All companies derive their value
from the future cash flows (earnings) they are capable of
generating for their stakeholders over time. Therefore, because
Earnings Determine Market Price in the long run, we expect the
future earnings of a company to justify the price we pay.
Since all investments potentially compete with all other
investments, it is useful to compare investing in any prospective
company to that of a comparable investment in low risk Treasury
bonds. Comparing an investment in Tupperware Brands Corp to an
equal investment in 10-year Treasury bonds, illustrates that
Tupperware Brands Corp's expected earnings would be 8.6 (purple
circle) times that of the 10-year T-bond Interest (see EYE chart
below). This is the essence of the importance of proper valuation
as a critical investing component.
Summary & Conclusions
This report presented essential "fundamentals at a glance"
illustrating the past and present valuation based on earnings
achievements as reported. Future forecasts for earnings growth
are based on the consensus of leading analysts. Although, with
just a quick glance you can know a lot about the company, it's
imperative that the reader conducts their own due diligence in
order to validate whether the consensus estimates seem reasonable
or not.
Disclosure:
No position at the time of writing.
Disclaimer
:
The opinions in this document are for informational and
educational purposes only and should not be construed as a
recommendation to buy or sell the stocks mentioned or to solicit
transactions or clients. Past performance of the companies
discussed may not continue and the companies may not achieve the
earnings growth as predicted. The information in this document is
believed to be accurate, but under no circumstances should a
person act upon the information contained within. We do not
recommend that anyone act upon any investment information without
first consulting an investment adviser as to the suitability of
such investments for his specific situation. A comprehensive due
diligence effort is recommended.
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