No big surprise here. Blue Nile (NILE) blows out estimates and raises guidance; I add the stock to my lists for the first time as a B+ stock. Then I change my mind and recognize the Co for what it is: on the cusp of greatness.So it's an A- pick. The reasons? Many. One of the best facets of this Co is its presence online and lack of presence as a bricks-and-mortar entity. They can leave that burdensome encumbrance to Zales and Tiffany's.
Kevin Stecyk's piece on NILE via Seeking Alpha is a solid summary of where the young Co stands today. Although I've taken a look at the Co's numbers, Kevin's bullet points are as good a starting place as any for a NILE newbie like me: • Net sales of $72.1 million, an increase of 26.7% over the second quarter of 2006;
• Gross profit grew by 32% and operating income grew by 39.8%, both were the highest that Blue Nile posted as a public company;
• Company claims to extend leadership position in online diamond and jewelry retailing as evidenced by its net income of $3.8 million and net income of $0.23 per share, representing an EPS growth of 28%;
• In Q2, total orders increased 27.2% as compared to a year ago;
• Average selling price per order was $1,630 in the second quarter;
• Website traffic growth was the highest since mid-2004;
• All retail channels—search, portals, partners, and email—were all very strong; and
• Sales and merchandise priced above $25,000 grew by 51%. One exceptional example was a single sale above $1.5 million from a repeat Blue Nile customer.
Certainly, I'll be doing a lot more reading about this intriguing company. Another quarter or two of great earnings could push NILE into A territory.
In the meantime, I'll be looking for a solid entry point, too.
Pupule Paul has no position in NILE.
