Will Sotheby's (BID) Stock Be Helped By eBay (EBAY) Deal?

NEW YORK (TheStreet) -- Sotheby's  (BID) and eBay (EBAY) plan to announce today that they have formed a partnership to stream Sotheby's sales worldwide, the New York Times reports.

This fall, most of Sotheby's New York auctions will be broadcast live on a new section of eBay's website.

Eventually the auction house expects to extend the partnership, adding online-only sales and streamed auctions taking place anywhere from Hong Kong to Paris to London, the Times said.

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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 robust revenue growth, impressive record of earnings per share growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and relatively poor performance when compared with the S&P 500 during the past year."

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

  • BID's very impressive revenue growth greatly exceeded the industry average of 1.4%. Since the same quarter one year prior, revenues leaped by 54.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SOTHEBY'S reported significant earnings per share improvement 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, SOTHEBY'S increased its bottom line by earning $1.86 versus $1.56 in the prior year. This year, the market expects an improvement in earnings ($2.30 versus $1.86).
  • BID's debt-to-equity ratio of 0.88 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that BID's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.80 is high and demonstrates strong liquidity.
  • In its most recent trading session, BID has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • Net operating cash flow has significantly decreased to -$268.13 million or 61.44% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: BID Ratings Report

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