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Is Sotheby's (BID) Stock Undervalued Right Now?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Sotheby's (BID). BID is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 16.99, which compares to its industry's average of 26.31. BID's Forward P/E has been as high as 21.74 and as low as 13.30, with a median of 16.13, all within the past year.

Investors should also recognize that BID has a P/B ratio of 4.43. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. BID's current P/B looks attractive when compared to its industry's average P/B of 6.58. Over the past 12 months, BID's P/B has been as high as 5.34 and as low as 3.89, with a median of 4.32.

Finally, our model also underscores that BID has a P/CF ratio of 15.30. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 23.62. Over the past year, BID's P/CF has been as high as 22.72 and as low as 13.44, with a median of 16.45.

These are just a handful of the figures considered in Sotheby's's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that BID is an impressive value stock right now.


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