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Tickers in this Article: TUP, AVP, REV, EL, PG
Tupperware (NYSE:TUP) is a direct seller of storage and serving solutions for the kitchen and also operates a smaller beauty segment that offers cosmetics and related personal care items. The business model is appealing because it is highly profitable and is proving popular in emerging markets where retail infrastructure isn't highly developed. The firm's fourth quarter results demonstrated these factors, and though the stock jumped sharply after the financial release, the valuation is still reasonable.

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Fourth Quarter Recap (L1)
Net sales jumped 4.6% to $655 million on double-digit growth in Asia (21.3% of total sales) and North America (12.7%) of the namesake storage and serving products. Sales in this product category fell 4% in Europe (34.2%) while North American beauty sales (16.7%) rose slightly and beauty grew 6% everywhere else (15.1%). Pure-play direct beauty rival Avon Products (NYSE:AVP) is growing briskly in international markets that now account for 80% of sales. Revlon (NYSE:REV), Estee Lauder (NYSE:EL) and Procter & Gamble (NYSE:PG) also sell cosmetic brands but primarily in traditional retail store channels. There is no publicly-traded peer that sells storage products directly to consumers.

One-time impairment and goodwill charges sent operating income down 5.9% to $117.1 million, but profit margins were still impressive at close to 18%. Net income fell 4% to $80.7 million on lower other expenses, or $1.26 per diluted share. Management stated that earnings were $1.38 per diluted share when backing out one-time items.

Year End Review and Outlook
Full year sales improved 8.1% to $2.3 billion while operating income increased 19.5% to $329.4 million or 21.5% of sales. Net income grew 28.8% to $225.6 million or $3.53 per diluted share and would have been $3.72 when backing out the aforementioned charges.

For the coming year, management expects to report sales growth between 8-10% and earnings between $4.23 and $4.33 for year-over-year growth in a range of 14-16%.

The Bottom Line
Tupperware shares rallied more than 15% after the earnings release. This pushed the forward P/E up to over 12, based on if the company hits the high end of its guidance range, but is still a very reasonable multiple given the company should continue growing briskly overseas. Costs to run its business are low. There is also no need to build out bricks-and-mortar stores and distributors across the world make sure the products make it to the Tupperware parties. Its figure will likely even show improvement in 2011. (Narrow down the universe of stocks to find the ones that best suit your needs. Check out 4 Steps To Picking A Stock.)

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