How the Wheels Came Off Sotheby's Bus

Seth Jayson, The Motley Fool
Updated

Sotheby's (NYS: BID) filed its 10-K on Feb. 29. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Sotheby's missed estimates on revenues and whiffed on earnings per share.

Compared to the prior-year quarter, revenue shrank and GAAP earnings per share shrank significantly.

Margins dropped across the board.

Revenue details
Sotheby's recorded revenue of $284.2 million. The five analysts polled by S&P Capital IQ wanted to see sales of $297.1 million on the same basis. GAAP reported sales were 11% lower than the prior-year quarter's $318.0 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $1.04. The three earnings estimates compiled by S&P Capital IQ averaged $1.28 per share on the same basis. GAAP EPS of $1.03 for Q4 were 24% lower than the prior-year quarter's $1.35 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 64.5%, 110 basis points worse than the prior-year quarter. Operating margin was 42.0%, 690 basis points worse than the prior-year quarter. Net margin was 25.1%, 520 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $91.7 million. On the bottom line, the average EPS estimate is -$0.17.

Next year's average estimate for revenue is $835.8 million. The average EPS estimate is $2.41.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 538 members out of 574 rating the stock outperform, and 36 members rating it underperform. Among 210 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 202 give Sotheby's a green thumbs-up, and eight give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Sotheby's is buy, with an average price target of $43.17.

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At the time thisarticle was published Seth Jayson owned shares of the following at the time of publication: Sotheby's. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of Sotheby's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy

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