It's not often that the Fool recommends a single stock twice. Sure, certain outstanding companies earn "double recs" within a single newsletter. But just because a business is a "buy" at one price doesn't mean it won't still be worth buying at a higher price, or that it won't be an out-and-out bargain at a lower price.
This rare double-rec situation has been the case with Middleby (NASDAQ:MIDD) and Alderwoods (NASDAQ:AWGI) at Motley Fool Hidden Gems, and with Marvel (NYSE:MVL) and Netflix (NASDAQ:NFLX) at Motley Fool Stock Advisor.
But when a single company gets picked by two separate newsletters, by investors with investing philosophies as divergent as those of Tom and David Gardner, it's practically unheard of. So Fools should pay especially close attention to Internet jeweler Blue Nile (NASDAQ:NILE) -- a pick of both Motley Fool Hidden Gems and Motley Fool Rule Breakers -- when it reports earnings tomorrow afternoon.
Speaking of Rule Breakers, the company is something of a rarity with that publication's rocket stock-seekers: a consistently profitable business. (Not that I'm knocking Rule Breakers. With its portfolio currently trouncing the S&P by over 13%, there's clearly something to be said for rockets.) In fact, Blue Nile has been profitable since 2002 -- even longer than it's been public. And analysts expect the company to stay that way. In tomorrow's report, they're predicting Blue Nile will announce $0.12 per diluted share in profits (a 33% improvement over the year-ago quarter) on $42 million in sales (a 24% improvement).
Those are pretty interesting numbers. On the revenues side, they lean towards the high side of the company's own expectations, announced back in August, of $40.5 million to $42.5 million. On the profits side, however, they're actually a penny ahead of the company's own more conservative guidance of $0.10 to $0.11 per share.
Which highlights this sad fact: Try as you might to underpromise so as to leave room for overdelivering, if analysts know you're a quality shop and prone to such "overdeliveries," they sometimes raise the bar a notch.
My advice: Ignore the analysts and their raised bar. When it reports tomorrow, focus rather on whether Blue Nile fulfilled its commitment to you, the investor, by earning what it said it would earn.
And also, pay special attention to the little "free cash flow" chart that Blue Nile includes just above its GAAP financial statements. Blue Nile is the only company I've ever seen do this: For your ease of reference, it tallies up its past 12 months' worth of free cash flow and lays it right out for you to see how much cash it's generated over the past year.
For both sides of the Blue Nile story, revisit our recent duel on the company in:
- Dueling Fools: Blue Nile Bull Rebuttal
- Dueling Fools: Blue Nile Bear Rebuttal
- Dueling Fools: Blue Nile Bull
- Dueling Fools: Blue Nile Bear
Fool contributor Rich Smith owns shares of Alderwoods and Marvel, but of no other company named above. The Fool has a disclosure policy.
