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$37.68 -0.81 (-2.10%)
10/7/2008 11:50 AM

Blue Nile, Inc. (NILE)

CAPS Rating:
***

An online retailer of diamonds and fine jewelry. The Company also provides guidance and support to enable customers to learn about and purchase diamonds as well as classically styled fine jewelry.

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Avatar yxxtrent (92.86) Submitted: 11/08/07 5:21 PM : Underperform Start Price: $79.23 NILE Score: 23.02

I like the website. It's very slick. The styles are good. Diamonds and jewelry are not going to go out of style. My problem is that clearly there is an economic slowdown in the US. Diamond purchases are optional and the first thing many will scale down or eliminate. Websites are easy to make so (no economic moat)competition is likely when things pickup. With a price to earnings of 93.4 clearly somone thinks sales will shoot through the roof. Compare that with internet travel site expedia's price to earnings of 39.3. or wal mart's of 14.6. Compare price for cash flow NILE-38.0, EXPE-12.7, WMT-9.3. How about price to book value? NILE-26.4, EXPE-1.7, WMT-2.9. Unless diamond sales can shoot through the roof in tough economic times then this stock is overpriced.

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