Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, jewelry retailer Zale (NYSE: ZLC) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Zale's business and see what CAPS investors are saying about the stock right now.


Headquarters (founded) Irving, Texas (1989)
Market Cap $205.9 million
Industry Specialty stores
Trailing-12-Month Revenue $1.9 billion
Management CEO Theophlius Killion (since 2010)
CFO Thomas Haubenstricker (since 2011)
Return on Capital (average, past 3 years) (28.3%)
Cash/Debt $24.6 million / $452.9 million
Competitors J.C. Penney
Signet Jewelers

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 59% of the 258 members who have rated Zale believe the stock will underperform the S&P 500 going forward.

Just this week, one of those bears, All-Star TSIF, tapped the stock's recent run-up as seemingly unsustainable:

May be near the end of a short squeeze after an analyst upgrade "caused" a short spike, followed by a computer trading spike, followed by a bigger short spike, followed by day traders checking in… [E]xpecting a retrace as a 52 week high for [Zale], despite somewhat better earnings the last quarter is not warranted. ... October earnings usually the lowest of the year.

Metrics look deceiving, but could be why [Zale] share price stays higher than warranted. ... [L]ittle if anything gets the bottom line in this highly competitive, economically dependent industry. Short term call, expect a slow bleed back down unless the economy buoys all ships.

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