- Tupperware Brands (NYSE:TUP) trades 2.1% higher premarket after it entered into an agreement to repurchase $75M of its stock in an accelerated share repurchase program which is equivalent to ~4.6M shares and represents ~8.7% of Tupperware's fully diluted outstanding stock.
- The program is expected to be funded with available cash on hand and revolver borrowings.
- Under program terms, Tupperware will make an initial payment of $75M to Wells Fargo and receive an initial delivery of ~3.4M shares of Tupperware's common stock.
- The company will repurchase shares under the ASR program as part of its existing $250M share repurchase authorization, which was approved by its board in June 2021.
- The final settlement of the ASR program is expected to be completed before the end of Q2.
That's a winner!
$18.18 is $800M and that's half of their $1.6Bn in sales and profits were just $18.6M last year but they expect to normalize back to $120M this year and project $163M next year (10% of sales). Not only have they gotten stupidly cheap but buying back 10% of their own stock should put a solid floor in around $17.50 so, for the LTP:
- Sell 20 TUP 2024 $13 puts for $3 ($6,000)
- Buy 30 TUP 2024 $15 calls for $7.50 ($22,500)
- Sell 30 TUP 2024 $25 calls for $4 ($12,000)
That's net $4,500 on the $30,000 spread that's $9,600 in the money to start. Even if we get completely burned and assigned, we'll be in 2,000 shares for $30,500, which is $15.25, which is 16% lower than it is now. So that's the worst case and the best case is clearing $25,500 (566%) at $25 – good money.
