Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, auctioneer Sotheby's
With that in mind, let's take a closer look at Sotheby's and see what CAPS investors are saying about the stock right now.
|Headquarters (Founded)||New York (1744)|
|Market Cap||$2.5 billion|
|Industry||Specialized consumer services|
|Trailing-12-Month Revenue||$880.4 million|
CEO William Ruprecht (since 2000)
CFO William Sheridan (since 2001)
|Return on Equity (Average, Past 3 Years)||10.4%|
|Cash/Debt||$666.2 million / $480.4 million|
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 94% of the 568 members who have rated Sotheby's believe the stock will outperform the S&P 500 going forward. These bulls include All-Stars sandvig and MagicDiligence, both of whom are ranked in the top 15% of our community.
This past summer , sandvig explained why Sotheby's was worth bidding on: "There will always be rich people who want to buy or sell rare collectables. It seems to me that there are some significant barriers to entry in this market."
Currently, Sotheby's even sports a cheapish P/E of 12.6. That represents a discount to other specialty retail plays like eBay
Considering both Sotheby's and Christie's have been in the business since the mid-1700's, the relatively small size of the market, and existing relationships with the few customers for these items (which routinely fetch tens of millions), the firm has an almost impenetrable economic moat against competition. ...
The other fundamentals are solid. Cash on the balance sheet, at $666 (!) million, eclipses a debt load of about $477 million. Free cash flow can be lumpy depending on how long the firm holds inventory, but current trends are around $300 million annually. ...
Valuation, too, looks fairly attractive at $32. Sotheby's will always be a firm that experiences wild revenue swings from year to year, but over the long term the company has proven able to generate operating margins around 30% while growing sales at 5-7% annually. I don't see why this can't continue. ...
Given this, Sotheby's long-term value looks to be around $43 per share, about 35% above current trading levels.
What do you think about Sotheby's, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Sotheby's, eBay, Amazon, and Bed Bath & Beyond. Try any of our Foolish newsletter services free for 30 days.