Direct make-up seller Avon Products (NYSE:AVP) has been hogging the industry headlines in recent weeks. Years of mismanagement have resulted in the sacking of the CEO and a takeover bid from an industry peer that sees potential in a turnaround and the appeal of selling directly to consumers. Tupperware Brands (NYSE:TUP) focuses primarily on the direct selling of kitchen related items, but also sells beauty supplies. And, in contrast to Avon, it is extremely well managed.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Company Overview
In a recent presentation to investors, Tupperware touted that its business is financially sound and generates steady cash flows. Its businesses, which include kitchen storage, preparation and serving products as well as beauty and personal care products under the Armand Dupree and BeautiControl brands, are also diversified across developed and emerging economies throughout the world. The sales mix between "Tupperware Brand Housewares" and "Beauty & Personal Care Product"s stood at 74% and 26% respectively. In terms of their global sales mix, 56% of sales stemmed from growing emerging markets in 2011. The kitchen category is highly appealing and has even caught the attention of Warren Buffett, whose Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) owns the higher-end Pampered Chef rival. Tupperware is a truly global firm. 90% of its sales stemmed from outside the U.S. in 2011.

SEE: Should You Invest In Emerging Markets?

Outlook and Valuation
Analysts currently project modest full year sales growth of 2.3% and total sales of approximately $2.6 billion. The average profit expectation currently stands at $5.04 per share and is expected to grow 11.7% to $5.63 per share by the end of 2013. Sales are projected to grow a slightly more robust 6.4% in 2013 to $2.8 billion. This puts the forward earnings multiples in very reasonable territory at 10.9 and 9.7 for each of the next two years.

SEE: Fundamental Analysis: Introduction

The Bottom Line
Over the longer haul, Tupperware has a goal to grow sales between 6 and 8% annually. It also plans to cut costs by up to 50 basis points annually and eventually get pre-tax profits up to the mid to high teens. In stark contrast to Avon, management has a solid track record of delivering on its goals. Over the past decade, it has steadily whittled down SG&A expense as a percent of sales. In 2002, SG&A expense was nearly 58% of sales and fell to below 52% last year.

SEE: The Risks Of Investing In Emerging Markets

Over the past five years, average annual sales are up a more pedestrian 6% but profits are up more than 18% annually. Tupperware has steadily leveraged single digit sales growth into double digit profit growth for more than a decade now. Given the expectations for steady growth going forward and the compelling earnings multiple, investors concerned about controlling downside risk would be well served to consider the stock over Avon. Most growth has also been of the safer organic variety, with the last major purchase the direct selling business of Sara Lee (NYSE:SLE) back in 2005.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Ryan C. Fuhrmann did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Term

    What are Non-GAAP Earnings?

    Non-GAAP earnings are a company’s earnings that are not reported according to Generally Accepted Accounting Principles.
  2. Mutual Funds & ETFs

    ETF Analysis: PowerShares FTSE RAFI US 1000

    Find out about the PowerShares FTSE RAFI U.S. 1000 ETF, and explore detailed analysis of the fund that invests in undervalued stocks.
  3. Options & Futures

    Use Options to Hedge Against Iron Ore Downslide

    Using iron ore options is a way to take advantage of a current downslide in iron ore prices, whether for producers or traders.
  4. Stock Analysis

    Fortinet: A Great Play on Cybersecurity

    Discover how a healthy product mix, large-business deal growth and the boom of the cybersecurity industry are all driving Fortinet profits.
  5. Stock Analysis

    2 Catalysts Driving Intrexon to All-Time Highs

    Examine some of the main reasons for Intrexon stock tripling in price between 2014 and 2015, and consider the company's future prospects.
  6. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  7. Charts & Patterns

    Understand How Square Works before the IPO

    Square is reported to have filed for an IPO. For interested investors wondering how the company makes money, Investopedia takes a look at its business.
  8. Technical Indicators

    4 Ways to Find a Penny Stock Worth Millions

    Thinking of trading in risky penny stocks? Use this checklist to find bargains, not scams.
  9. Professionals

    Chinese Slowdown Affects Iron Ore Market

    The Chinese economy's ongoing slowdown is having a major impact on iron ore demand.
  10. Investing Basics

    Why do Debt to Equity Ratios Vary From Industry to Industry?

    Obtain a better understanding of the debt/equity ratio, and learn why this fundamental financial metric varies significantly between industries.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  4. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  5. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
  6. Net Present Value - NPV

    The difference between the present values of cash inflows and ...
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  5. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  6. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!