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Sothebys Stock Upgraded (BID)

NEW YORK ( TheStreet) -- Sothebys (NYSE: BID) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:

  • The gross profit margin for SOTHEBY'S is rather high; currently it is at 63.70%. Regardless of BID's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BID's net profit margin of 30.30% significantly outperformed against the industry.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Diversified Consumer Services industry average. The net income increased by 30.8% when compared to the same quarter one year prior, rising from $73.58 million to $96.25 million.
  • SOTHEBY'S has improved earnings per share by 26.6% 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 years. We feel that this trend should continue. During the past fiscal year, SOTHEBY'S turned its bottom line around by earning $2.32 versus -$0.15 in the prior year. This year, the market expects an improvement in earnings ($2.76 versus $2.32).
  • Powered by its strong earnings growth of 26.60% and other important driving factors, this stock has surged by 69.18% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BID should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The revenue growth greatly exceeded the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 45.7%. Growth in the company's revenue appears to have helped boost the earnings per share.

Sotheby's, together with its subsidiaries, operates as an auctioneer of fine and decorative art, jewelry, and collectibles primarily in the United States, the United Kingdom, China, and France. The company operates in three segments: Auction, Finance, and Dealer. The company has a P/E ratio of 21.2, equal to the average specialty retail industry P/E ratio and above the S&P 500 P/E ratio of 16.4. Sothebys has a market cap of $3.4 billion and is part of the services sector and specialty retail industry. Shares are up 16.9% year to date as of the close of trading on Thursday.

You can view the full Sothebys Ratings Report or get investment ideas from our investment research center.

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