My dueling partner Billy Fisher implies that Kobe Bryant overpaid by buying a 7-carat engagement ring at Zale
As for Blue Nile's low-gross-margin strategy, all that does is make it that much tougher for the firm to reinvest in its business. After all, lower gross margins carry with them lower potential profit margins.
On that front, Blue Nile's profit margin of 5.11% over the past year pales in comparison with Tiffany's
I am glad to see that Billy acknowledged Blue Nile's valuation concerns. No less an authority than Motley Fool Hidden Gems analyst Tom Gardner had this to say when closing out that newsletter service's winning position: "Blue Nile has been priced for perfection. It's a seller of gems and a gem in its own right, but at today's price, reluctantly, I'm compelled to accept the amazing rewards the market has provided." (With your 30-day free trial, you can read Tom's whole analysis.)
Unlike his brother David, whose growth-focused Motley Fool Rule Breakers newsletter service places less concern on valuation than on growth prospects, Tom realizes that there is such a thing as too much to pay. That even goes for high-class gem retailers like Blue Nile.
At the time of publication, Fool contributor Chuck Saletta did not own shares of any company mentioned in this article. Blue Nile is a current Rule Breakers pick and a former Hidden Gems selection. The Fool's disclosure policy sparkles like a signature Ideal cut, D-color diamond under bright light.