TUP: Up More than 300% in the Past Year, is Tupperware Brands Stock Still a Buy?

Most stock pickers are primarily focused on pinpointing the next tech stock or growth stock that will pop instead of the tried-and-true value stocks that tend to tick higher gradually.

However, as is often said, slow and steady wins the race. Open your mind to the prospect of investing in a good value stock, hold tight for the long haul, and there is a good chance you will be pleased with the return on your investment.

Tupperware Brands (TUP) is one such value stock worthy of your consideration. Below, I provide a look at TUP to gauge whether its recent spike is the result of the temporary aberration that is the coronavirus pandemic or if the stock has legitimate long-term appeal.

TUP by the Numbers

TUP has skyrocketed more than 300% across the prior year. TUP traded below $10 up until late July, when it blasted through the benchmark, quickly moving into the teens. TUP stagnated until August and exploded once again, soaring to the high $30s only to settle down in the low $30s.

The average analyst price target for TUP is $37, indicating the stock has a potential upside of 15%. Though TUP is around $6 below its 52-week high of $38.59, it has a relatively low forward P/E ratio of 13.35. In other words, TUP might still be undervalued even though it has jumped 300% in a single year.

TUP moved higher this past autumn after an analyst raised its target price for the stock from $30 to $46. Furthermore, TUP’s latest earnings surpassed analyst estimates. The company has increased its earnings fourfold compared to the year prior. TUP’s revenue is up 14%, coming in at slightly more than $477 million. This figure is well beyond the $362.8 million expected by analysts.

The Pandemic is Helping TUP

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The shift away from in-restaurant dining and fast food toward DIY (do it yourself) cooking at home has helped TUP move higher across the past year. Consumers across the globe are using TUP products to store food leftovers. The slow distribution of coronavirus vaccines is prolonging the pandemic that much longer.

Though this is disturbing news in the context of human health, it is music to the ears of TUP investors. TUP has a concrete turnaround plan highlighted by improving its cost structure, boosting liquidity, and enhancing its core business.

TUP’s POWR Ratings

TUP is ranked 53rd out of 66 publicly traded companies in the Home Improvement & Goods industry. TUP has a “D” Peer Grade component along with “C” grades in the Trade Grade and Buy & Hold Grade components of the POWR Ratings. However, it is worth noting TUP has a “B” grade in the Industry Rank component. In other words, TUP leaves a lot to be desired in the context of the POWR Ratings.

The Verdict

TUP’s overall “C” grade in the POWR Ratings is not exactly reassuring. We may be witnessing this value stock peak as the pandemic rages on and consumer behavior temporarily changes. However, people will gradually revert back to their old ways, meaning the demand for TUP products is bound to decline moving forward.

The pandemic will eventually draw to a close, causing TUP sales to slide back to normal, likely within the next year to 15 months. Add in the fact that you can reuse TUP products for years or even decades, and the stock is even less appealing.

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TUP shares rose $0.02 (+0.06%) in after-hours trading Wednesday. Year-to-date, TUP has declined -3.58%, versus a 0.14% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...