Sotheby’s (BID) Stock Gains After Auction Gems

Sotheby’s (BID) stock is increasing after the company held record-breaking contemporary art and gemstone auctions.
By Amanda Gomez ,

NEW YORK (TheStreet) -- Sotheby's (BID) - Get Report stock is advancing 3.8% to $29.80 on heavy trading volume on Thursday afternoon following two record-breaking auctions.

The auction house's broke a record for most expensive Cy Twombly painting sold and set a new world auction record for the most expensive gemstone.

Sotheby's auctioned Cy Twombly's untitled painting for $70.53 million, over 10 times more than what the piece was sold for in 1990.

The painting was part of last night's contemporary art sale in New York City, which raised a total of $294.85 million, beating the company's bottom line guidance of $254 million.

"We have already broken all previous records for a sale series here, with sales of $1.1 billion in just eight days," Alexander Rotter, worldwide co-head of contemporary art at Sotheby's, said in a statement.

In Geneva, Sotheby's auctioned a blue diamond that was sold for $48.47 million to a collector from Hong Kong.

"Tonight's sale takes our total in Geneva for this year to an unprecedented $300 million, following our record-breaking sale in May," David Bennett, Sotheby's worldwide chairman of jewelry, added.

So far today, 2.24 million shares of Sotheby's have exchanged hands, compared with its average daily volume of 1.09 million shares.

Separately, TheStreet Ratings team rates SOTHEBY'S as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

We rate SOTHEBY'S (BID) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 0.4%. Since the same quarter one year prior, revenues rose by 46.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Consumer Services industry. The net income increased by 35.5% when compared to the same quarter one year prior, rising from -$27.73 million to -$17.89 million.
  • SOTHEBY'S has improved earnings per share by 35.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SOTHEBY'S reported lower earnings of $1.68 versus $1.86 in the prior year. This year, the market expects an improvement in earnings ($2.15 versus $1.68).
  • BID has underperformed the S&P 500 Index, declining 18.84% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The gross profit margin for SOTHEBY'S is rather low; currently it is at 18.10%. It has decreased from the same quarter the previous year.
  • You can view the full analysis from the report here: BID

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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