TSC Ratings' Updates: Tupperware

Revenue increased slightly by 2.2% since the same quarter a year ago, improving EPS by 7.4% in the most recent quarter. The company has demonstrated a pattern of positive earnings per share growth over the past two years, which we feel should continue, suggesting improving business performance. During the past fiscal year, TJX increased its bottom line by earning $1.68 vs. $1.62 in the prior year. This year, the market expects an improvement in earnings $2.07. The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying successful management of debt levels. The quick ratio of 0.17, however, is very weak and demonstrates a lack of ability to pay short-term obligations.

TJX's gross profit margin of 28% is lower than desirable, but it has managed to increase from the same period last year. Its net profit margin of 5% compares favorably with the industry average. Net operating cash flow has decreased to $258.42 million, or 26.94% when compared with the same quarter last year, but TJX is still fairing well by exceeding its industry average cash flow growth rate of -49.77%.

We've downgraded Tupperware Brands(TUP Quote), which operates as a direct seller of various products across a range of brands and categories through an independent sales force, from buy to hold. Strengths include its revenue growth, notable return on equity and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and a generally disappointing performance in the stock itself.

Revenue rose by 12.8% since the same quarter a year ago, outperforming the industry average of 5.4% and boosting EPS. Tupperware reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two year, which we feel should continue. During the past fiscal year, the company increased its bottom line by earning $1.87 vs. $1.54 in the prior year. This year, the market expects an improvement in earnings to $2.60 versus $1.87. Tupperware's gross profit margin is rather high at 66.8%, but it has managed to decrease from the same period last year.Net profit margin of 5.4% compares favorably with the industry average. The debt-to-equity ratio of 1.23 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along Tupperware also maintains a quick ratio of 0.70, which illustrates the inability to avoid short-term cash problems.

Shares are down by 51.7% on the year, underperforming the S&P 500. Naturally, the overall market trend is bound to be a significant factor, and in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

Other ratings changes include Ruby Tuesday.(RT Quote) and Griffon(GFF Quote), both downgraded from hold to sell.

All ratings changes generated on Nov. 24 are listed below.

Ticker	Company	Current	Change	Previous
EJ	E-House China	SELL	Initiated
ENB	Enbridge	HOLD	Downgrade	BUY
FELE	Franklin Electronics	HOLD	Downgrade	BUY
GFF	Griffon	SELL	Downgrade	HOLD
HHGP	Hudson Highland	SELL	Downgrade	HOLD
HTLF	Heartland Financial	HOLD	Downgrade	BUY
IIVI	II-VI	HOLD	Downgrade	BUY
JOE	St. Joe	SELL	Downgrade	HOLD
KPPC	Kapstone Paper	SELL	Downgrade	HOLD
LTS	Ladenburg Thalmann	SELL	Downgrade	HOLD
MGG	Magellan Midstrem	SELL	Downgrade	HOLD
MOCO	Mocon	HOLD	Downgrade	BUY
MXC	Mexco Energy	HOLD	Downgrade	BUY
RT	Ruby Tuesday	SELL	Downgrade	HOLD
SIVB	SVB Financial	HOLD	Downgrade	BUY
SYUT	Synutra	SELL	Downgrade	HOLD
TJX	TJX	HOLD	Downgrade	BUY
TUP	Tupperware Brands	HOLD	Downgrade	BUY
UCBI	United Community Banks	SELL	Downgrade	HOLD
UVV	Universal	HOLD	Downgrade	BUY

Each business day, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates.

While the ratings model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.

However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.

For those reasons, we believe a rating alone cannot tell the whole story, and that it should be part of an investor's overall research.