Blue Nile, Inc. (NILE)

The run in done

Overvalued, low earnings high PE - this is not Amazon, loss of reputation due to current law suit.

The next few years will not be a good time to be invested in a purveyor of high-priced, non-necessary, consumer products. NILE has had a nice run up; now it's time to get out or to short it on its descent.

My estimated P/E for this total year is 75. This stock has made a great run up this year, but for what reason? Earnings are down year over year, as is revenue. I'm a seller of this stock even if it beats on EPS, the P/E is way too high.

tenmile

People get married even in uncertain times and Blue Nile has a great cost and experience proposition for men looking to make that once in a lifetime investment.

OK, so diamonds are not such a hot item in this sluggish economy but this internet retailer is a class operation. I'm a repeat customer who enjoys browsing their website. Needless to say I've been very pleased with the product. They will be on the cutting edge out of the downturn and I predict they will be able to leverage their market share when the buying starts again.

Overpriced relative to its peers.

Cyclical action in an uncertain market in an adverse environment.

This thing has come too far too fast. Fundamentals and Valuation aren't jiving. The only thing that will cause fundamentals and valuation to spread wider is if Amazon buys them out. If that happens, you can throw fundamentals out the window.

The only thing that would make sense for the lofty valuation is if NILE demonstrates kick butt earnings growth which I find hard to believe in this environment.

There is less momentum, less volume, and less buying going on. We are in the last part of this rally.

The 1929-1930 equity rally (coming out of The Great Depression) lasted 147 days and the market was up 46%. It has been the same amount of time since the March, 2009 low and we are up about the same percentage. It’s déjà vu (paramnesia), so prepare for a drop of about the same percentage (85%).

People aren't going to stop getting married, but they will shop for the cheaper prices on rings.

chk999

No point commenting because Jakilathehun said it all in his 6/19/09 pitch.

Jewelry sales are down in this economy.

Let's see here ... we've got a company that sells diamonds and fine jewelry online. Sounds like a crazy idea to me, but the site looks well laid out and they seem to be profitable, so I won't question the basic business model. What I don't quite understand is the market's insane valuation of this. This is a luxury retailer operating in the worst environment for luxury retailers since at least the 1970s (and maybe the worst since the Great Depression). I'm looking at the financials and I don't quite see the phenomenal growth that others are seeing. So what leads people to conclude that this company is worth $40+?

Net tangible assets are worth roughly $1.59 per share, so the Price/NTA ratio is 25. That's very steep, even for a high-growth company! But as far as the growth goes --- where's the beef! Top-line revenues declined 7.5% from FY '07 to FY '08. Sure revenues grew 26.5% from FY '06 to FY '07, but that was back before the economic collapse! For the 1st Quarter of FY '09, revenues declined another 11.5% year-over-year!

Even assuming that they could somehow move back to FY '07 profitability and grow free cash flows at a phenomenal 5% rate annually for the rest of eternity, I still only come up with a valuation of around $21! What kind of absurd level of growth do they need to have in order to reach the $40?!!!!

I can see no other factors that might lead to skewed results in income. For instance, their cost structure is highly variable and their gross margins are only 20%. Given that, they have to increase incremental revenues very significantly in order to raise the bottom line significantly. This isn't like a high-tech firm with high-fixed costs that looks unprofitable, but just a slight bit of incremental revenue could make the bottom line skyrocket. It also appears their SG&A expenses have been increasing over time.

Even if I increase the initial year forecast on my DCF analysis to $2 in FCFs per share (I initially used $1.10 per share which might be an exaggeration itself) and still use my 5% growth rate, I only come up with a valuation of $36.25 per share.

Realistically speaking, this company should probably be valued closer to $18. Not sure where, why, or how Mr. Market came up with the $40 pricepoint so --- I'm redthumbing!

Like the company, like the theory, like the product, but it got a bit ahead of the market.

overpriced and an oddly bad idea. i guess it appeals to the lazy, rich husband, but who else? who is going to want to buy new jewelry online?

the price has run up on what, the novelty of the idea? yep, I'm thinking that its novelty. Can't find anything else. Once the novelty wears off it'll go the way of pets.com or whatever that rock was.