Direct-sell companyTupperware ( TUP ) offers two characteristics that income investors find desirable.
First, earnings growth is stable. The five-year EPS Stability Factor is 4 on a scale that runs from 0 (calm) to 99 (wild).
Second, the dividend shows growth. The quarterly payout has increased from 22 cents a share to 36 cents a share from 2009 to 2012 -- a 64% increase in roughly three years. The annualized yield is 2.2%.
Yet, two other factors are worth noting -- the changing character of the company and recent chart action.
Tupperware passed a tipping point in 2008 when emerging markets accounted for 50% of total revenue for the first time. In the first nine months of 2012, emerging markets drove 62% of revenue.
The company is increasingly an emerging markets play. Risk comes with it. A strong U.S. dollar can hurt results. In Q3, revenue dropped 1% vs. the year-ago period. However, excluding currency, sales rose 6%.
If you run a five-year comparison screen between the stock price and the U.S. dollar index, they don't track. So currency is an influencing factor, not a determining factor.
The big plus for Tupperware's emerging market strategy is the potential for faster growth, though that hasn't shown up big-time yet.
Earnings grew 20% in both 2010 and 2011, but growth is expected to drop to 12% when 2012 results are announced before the open Jan. 29. The Street sees 11% EPS growth this year along with a revenue pop of almost 6%.
Other fundamentals look stronger. Pretax margin rose to 13.9% in 2011, the best in at least nine years.
Return on equity, a gauge of financial efficiency, hit 42% in 2011, well above the 17% level associated with top stocks.
The recent flap surroundingHerbalife ( HLF ) may have created an opportunity on the chart for Tupperware. A hedge fund manager slammed Herbalife's business model. Although no such questions surround Tupperware, the stock appeared to correct in sympathy.
The pullback stopped at the 50-day line, and the subsequent bounce put Tupperware in a buy zone. The stock also is back in a buy zone from a 63.69 buy point it cleared in November.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
