Please ensure Javascript is enabled for purposes of website accessibility

Why Tupperware Brands Stock Rallied 14% at the Open Today

By Reuben Gregg Brewer - Jun 22, 2021 at 10:25AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the iconic plasticware maker jumped after it updated its capital allocation policy. Here's a quick look at what you need to know.

What happened

Shares of Tupperware Brands (TUP 1.41%) rose a quick 14% as trading got underway on June 22. The maker of plasticware made two announcements in one news release, sent after the close of trading on June 21, which were likely the cause of the big price advance.

So what

The first bit of news in yesterday's release was that Tupperware had paid down $58 million worth of a term loan. Chief Financial Officer Sandra Harris tied this decision directly to the company's ongoing turnaround efforts, which have improved Tupperware's liquidity position over the past 18 months. Harris described the move as accretive.

A person raising their arms in triumph in front of a computer.

Image source: Getty Images.

That's good, but more telling was the second item contained in the news release -- Tupperware is updating its capital allocation policy to include a $250 million stock buyback. Harris noted that the decision tied back to the company's "increased confidence" in its future cash flow generation capacity. Stock buybacks often arrive to great fanfare but don't always pan out. However, it seems as though Tupperware is getting a lot more confident about its future. Investors reacted positively, as you might expect.

Now what

Tupperware shares are up more than 370% over the past year. Although that period is obviously biased by the 2020 coronavirus-led bear market, the S&P 500 Index is up only around 36% or so over the same span. Clearly investors have priced in a lot of good news at Tupperware. Long-term investors should probably take a cautious approach here despite the good news.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tupperware Brands Corporation Stock Quote
Tupperware Brands Corporation
TUP
$12.25 (1.41%) $0.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.