Based on the aggregated intelligence of 145,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, online jeweler Blue Nile (NASDAQ:NILE) has received a distressing two-star ranking.

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

Blue Nile facts

Headquarters (Founded)

Seattle (1999)

Market Cap

$787.9 million


Internet retail

Trailing-12-Month Revenue

$284.98 million


CEO Diane Irvine (since 2008)
CFO Marc Stolzman (since 2008)

Total Revenue and Net Income Growth (Over Past Year)

(11.3%) and (30.5%)

Price-to-Earnings (NILE and Industry)

75 and 17.2

1-Year Return


Competitors (NASDAQ:AMZN)
Tiffany (NYSE:TIF)

CAPS Members Bearish on NILE Also Bearish on

CAPS Members Bullish on NILE Also Bullish on


Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 33.5% of the 310 All-Star members who have rated Blue Nile believe the stock will underperform the S&P 500 going forward. These bears include kurtdabear and jed71, both of whom are ranked in the top 10% of our community.

This past fall, kurtdabear thought that Blue Nile was ready to lose its luster: "The next few years will not be a good time to be invested in a purveyor of high-priced, non-necessary, consumer products. [Blue Nile] has had a nice run up; now it's time to get out or to short it on its descent."

In a more recent pitch from last week, jed71 echoes that bearish sentiment:

PE and future earnings projections seem very, very aggressive. I am not sure how this company can achieve such growth in a down market, with the consumer on the ropes. Selling jewelry in a good market is difficult, much less a terrible one. ... and some other retailers seem heavily focused on marketing to more cost conscience online consumers, which will probably cut into some of [Blue Nile's] growth.

With expected lower overall sales in the jewelry market, rising commodity prices for gold / silver, and pretty stiff competition, I would not be willing to risk any long position here. In fact, I might consider some puts or a small short position given the extent to which they are currently overvalued.

What do you think about Blue Nile, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Google and Blue Nile are Motley Fool Rule Breakers choices. Apple,, and eBay are Motley Fool Stock Advisor recommendations. Motley Fool Options has recommended a bull call spread position on eBay. The Fool's disclosure policy always gets a perfect score.