The US dollar has been surging of late on expectations of higher growth and rising interest rates in the US. A strong dollar hurts companies that derive a significant portion of their earnings from outside of the US.
About the Company
Tupperware Brands Corporation (TUP – Free Report) ) is a multi-brand, multi-category, relationship-based sales company. It primarily manufactures and sells preparation, storage, and serving solutions for the kitchen and home.
The company made its debut in 1946 and has now expanded its presence in almost 100 countries around the world. Its sales force consists of independent contractors who market products directly to consumers.
As the company derives about 65% of its sales from emerging markets, it is a play on the growing middle class with rising incomes in these countries.
Disappointing Results and Guidance
Their earnings of $0.87 per share beat the Zacks Consensus Estimate of $0.80 per share but sales missed the consensus. Earnings were also above the high-end of their guidance in both dollars and local currency terms.
Emerging markets sales were up 5% in local currency terms and accounted for 71% of total but developed markets sales were down 5%
Management guidance of EPS between $1.37 and $1.42 for the fourth quarter was also below street consensus.
Due to weak guidance, quarterly and annual estimates have been revised downwards in the past few weeks. Zacks Consensus Estimates for the current quarter and year are now $4.32 per share and $4.53 per share respectively down from $4.34 per share and $4.68 per share, 30 days ago.
Negative estimates revisions send the stock to Zacks Rank # 5.
TUPPERWARE BRND Price, Consensus and EPS Surprise
The Bottom Line
While the stock looks attractive in terms of valuation and dividend yield, the company faces headwinds due to the rising dollar. For the time being, investors may like to avoid the stock.
Further, while the longer-term outlook for emerging markets looks bright, in the shorter-term they are likely to be hurt by rising rates in the US.
Investors looking for a better play in the Consumer Products industry could consider Ollie’s Bargain Outlet Holdings (OLLI)), a Zacks Rank # 2 (Buy) stock.
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