Tupperware Brands (NYSE:TUP) focuses on a direct-sales model that consists of an army of individuals that sell its kitchen storage and beauty brands directly to other consumers. The business model is proving quite popular in emerging markets and could result in steady, substantial gains for shareholders in the coming years.  

Second Quarter Sales Review
Net sales increased 8% to $565.1 million, which was comprised of 6% organic growth and 2% from positive currency fluctuations. Emerging markets made up 56% of sales and grew a very healthy 15%, as Tupperware’s direct-sales model has appeal in markets where more traditional retailing channels are less established. The company ended the quarter with an “independent sales force” of 2.5 million individuals.

Sales in the namesake segment selling “storage and serving solutions for the kitchen” that competes with the likes of Newell Rubbermaid (NYSE:NWL) and Berkshire Hathaway’s (NYS:BRK.B) (NYSE:BRK.A) Pampered Chef business, reported modest 3% growth in Europe and only slightly higher growth in emerging markets in the region due to challenges in Russia and Greece. Asia Pacific sales improved 19%, largely due to currency benefits, though China, India and Indonesia grew more than 40% each. North American growth was also respectable, growing 11% on a reported basis.

The other segment sells a number of beauty brands and competes with Avon Products (NYSE:AVP) across the globe. North American sales increased 3% and 15% in international markets on robust growth in Brazil, the Philippines and Argentina.  

Profit Recap
Segment profits grew 10% to $94.7 million, with only the Tupperware Europe segment seeing a decline. Tupperware segment profits improved 22% and 41% in Asia Pacific and North America, respectively. A lack of one-time charges helped total company operating income increase 45% to $80.1 million. Flat income tax expense pushed net income ahead 75% to $57.9 million, or 90 cents per diluted share.

Outlook 
Tupperware expects 6-8% sales growth for the full year and reported earnings between $3.35 and $3.45 per share, which includes a number of nonrecurring items and includes negative currency trends. Analysts currently project 17% sales growth to $2.30 billion and $3.65 in earnings, the last of which would represent a substantial increase from the $2.75 reported in 2009.  

The Bottom Line
At a current share price just under $40, Tupperware trades at a forward P/E of under 11. Free cash flow exceeded $3 per share last year for a trailing multiple of 13. In other words, Tupperware is reasonably valued. It has also posted high teens returns on invested capital in recent years and sports a decent dividend yield of 2.5%. Throw in compelling overseas growth prospects, and Tupperware has an appealing mix of growth and income potential to achieve high total annual returns for shareholders. (For more, check out Re-evaluating Emerging Markets.) 

http://stocks.investopedia.com/stock-analysis/2010/Tupperware-An-Emerging-Markets-Play-TUP-NWL-BRK.B-BRK.A-AVP0723.aspx