Motley Fool Rule Breakers
newsletter recommendation Blue Nile
Sales in the fourth quarter, prime season for this online retailer of diamonds and jewelry, were up an impressive 30.3%. Income before taxes was up 38.3%. Ah, and the real diamond is the free cash flow, a Fool's favorite way to measure whether money is really being made. It was up 100% (to $29.6 million) from last year's fourth quarter.
The company also announced it has authorized the repurchase of up to $30 million of its own shares (yes, it about matches the free cash flow). The company sees that as a good investment because it has confidence it can "scale and grow the business with minimal capital expenditures."
Debt-free and with $101 million in cash and marketable securities -- money that would even make Diamond Jim Brady blush -- the company has plenty of cash to make other investments as they become available.
The future looks sparkling, too. Sales for the coming year are expected to rise from $169.2 million to between $200 and $212 million -- an 18% to 25% increase. Net income is expected to be between $0.67 and $0.72 a share. That prices the stock at a rich 39 times forward earnings, but for that price, you are getting a growing, high-margin Internet business that dominates its market.
You can buy high-end brick-and-mortar jeweler Tiffany
Fool contributor W.D. Crotty does not own stock in the companies mentioned. Click here to see the Motley Fool's disclosure policy. Trivia buffs: Diamond Jim Brady was not only legendary for his collection of diamonds but for his appetite. A New York restaurateur once said he was "the best 25 customers I ever had."