NEW YORK (TheStreet) -- Blue Nile (NILE) shares are down -1.9% to $26.70 in pre-market trading on Tuesday after being downgraded to "market perform" from "outperform" by analysts at William Blair.
The online diamonds and jewelry retailer's stock has declined 29.2% over the past 52 weeks.
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Separately, TheStreet Ratings team rates BLUE NILE INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate BLUE NILE INC (NILE) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NILE's revenue growth has slightly outpaced the industry average of 4.8%. Since the same quarter one year prior, revenues slightly increased by 6.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- BLUE NILE INC has improved earnings per share by 14.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, BLUE NILE INC increased its bottom line by earning $0.85 versus $0.65 in the prior year. This year, the market expects an improvement in earnings ($0.88 versus $0.85).
- Net operating cash flow has slightly increased to -$43.81 million or 1.34% when compared to the same quarter last year. Despite an increase in cash flow, BLUE NILE INC's cash flow growth rate is still lower than the industry average growth rate of 15.47%.
- The gross profit margin for BLUE NILE INC is rather low; currently it is at 19.33%. Regardless of NILE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.04% trails the industry average.
- NILE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 30.86%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: NILE Ratings Report