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Proprietary Data Insights Financial Pros’ Top Home Container Stock Searches in the Last Month
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Pros Rubber Neck for This Train Wreck |
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In the 1950s, suburban women came together for Tupperware (TUP) parties. These technologically advanced containers keep food fresh and organize your life. Today, the company teeters on the edge of bankruptcy. Still a common household name, Tupperware containers rely on a brand that’s lost its value over time. Recently, the stock garnered attention for a massive surge in share price and a debt restructuring deal. This lifeline helps the company stay afloat. And maybe…just maybe…it might make it investible. Tupperware’s Business Go to the Tupperware Brands website, and this is what you see in the ‘Investor Story’ section:
That’s not a good sign… Want a list of their products? Too bad. The best you’ll get is a pivot to a YouTube video from two years ago. This kind of slipshod marketing is what you’d expect from a fly-by-night OTC stock. So what do they do? Create ‘innovative, functional, and environmentally responsible’ products sold in more than 80 countries. They’re kitchen containers and storage, food prep items, and serving solutions. Remember those Tupperware parties we mentioned? The company sold its products to sales reps, who then sold them at higher prices to retail customers. Think Avon products. It’s called multi-level-marketing (MLM), and many people find it unsavory. In 2021, new management planned to move away from the direct seller model in favor of a multi-distribution approach. Financials
Source: Stock Analysis Sales have been steadily falling for decades with intermittent periods of growth. Gross margins similarly contracted over time. Free cash flow eventually turned negative as the company started bleeding money in 2022. The company holds over $700 million in total debt, more than all the cash from operations generated in the last six years. The spend $31.7 million on interest yearly with only $110 million in cash onhand. Last April, the company warned it was on the verge of bankruptcy. The recent debt deal essentially reduces interest payments by $150 million and pushes out the $348 million debt repayments and interest payments to 2027. Valuation
Source: Stock Analysis Obviously, with negative cash flow, the company has no earnings. Niche companies like Yeti (YETI) that were darling stocks post-pandemic have struggled to maintain their sales growth. Other container companies like Newell (NWL) aren’t doing much better than Tupperware. Growth
Source: Seeking Alpha Growth across most storage and organization products is down and expected to remain that way. Even the popular The Container Store (TCS) expects sales to decline in the coming year. Profitability
Source: Seeking Alpha All the companies have seen their margins pinched by higher supply chain costs and inflationary pressures. Most are either barely profitable or not at all. Our Opinion 8/10 Look, Tupperware is in deep trouble. The odds it survives are 50/50 at best. However, this was a +$50 stock five years ago. If…and this is a big if…the company can pull off its shift to multi-channel distribution, which shouldn’t be THAT difficult, it could save the company. This won’t be the next great business. But, on a pullback, taking a small position on the stock below $4.00, with the FULL acknowledgment that there’s a good chance you could lose the money, could also yield enough of a payout that it makes the risk/reward bet here worthwhile |
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