SunTrust Analysts Hopeful Tupperware Has Turned A Corner

Tupperware Brands Corporation TUP investors that are focusing on the company's Q2 earnings beat may be missing the "real highlight" of the quarter, at least according to SunTrust Robinson Humphrey's Michael Swartz.

Swartz commented in a note following Tupperware's print that the "real highlight" of the quarter was a "rebound" in its emerging market growth of 7 percent.

"This was a pleasant surprise following several choppy quarters and we were pleased to see Tupperware Brands maintain its 2016 outlook (ex currency)," the analyst wrote. Shares remain Neutral rated with a price target raised to $62 from a previous $57.

Swartz expanded that the company's "largest swing factor" was actually seen in Indonesia, which also happens to be its largest single market. Sales in the country rose 4 percent in the quarter, marking a turnaround from an 8 percent decline in the prior quarter. On the other hand, sales in established markets fell 4 percent.

Despite the improvement in emerging markets, continued success in the region could be offset by a shift of marketing expense into the bottom half of the year, a more adverse foreign exchange hit compared to prior expectations.

Bottom line, Swartz stated that Tupperware Brands' Q2 implies it has "turned a corner" but the stock is trading at around 15x estimated 2016 earnings per share, which implies a "balanced" risk to reward profile.