All last year, online diamond dealer Blue Nile (NASDAQ:NILE) made a habit of beating Wall Street's best guesses as to its performance. On Monday, it starts off a new year with a batch of results for the first quarter of 2007.

After the news comes out, we'll have time a-plenty to dissect it. But in these few hours before we begin obsessing over Blue Nile's short-term progress, let's take a moment to review what investors think about it as a long-term investment. Our tool in this endeavor: Motley Fool CAPS, where we poll more than 28,000 ranked investors for their views on more than 4,000 companies, Blue Nile among them. Here's what Fools have to say about the company.

Up or down?
Nearly 500 investors have submitted opinions on Blue Nile. The verdict: Looks a bit like cubic zirconium.

Fully 89% of CAPS investors think Blue Nile will flow past the market, an endorsement that only grows stronger as we check the opinions of the CAPS All-Stars -- 92% of whom give Blue Nile the thumbs-up. Merge the two results, run them through our CAPS black box, and Blue Nile comes out with three stars out of a possible five.

This puts Blue Nile midstream amongst its CAPS peers:

E-Commerce Group

CAPS Rating
(5 Stars Maximum)






Blue Nile







Wall Street vs. Main Street
Wall Street is considerably less enthusiastic about Blue Nile. Of the half-dozen professional investors we track, only four rate Blue Nile a buy, while two think it's an underperformer. It makes you wonder just how closely they're paying attention, because Blue Nile has outperformed the S&P 500 by 23 percentage points over the past 52 weeks.

Bull pitch
The top-rated bull pitch on CAPS goes like this:

With no bricks-and-mortar stores, there's no hard sell or distraction or snobby salespeople, and Blue Nile's site focuses on customer education on diamonds. They did a great job of creating a well-known Internet brand in very little time. I've used them for a few purchases and always found their service to be very nice. ... Management also seems to be smart and honest. A great stock for the long term.

Bear pitch
Blue Nile antagonists have two main beefs with the company: share dilution and a high share price. I can't argue with the latter -- a trailing P/E of 63 sure does look steep. But on the former, according to Capital IQ, Blue Nile's share count has fallen in each of the past three quarters.

Who said that?
To learn the identities of the wise Fools who penned these thoughts, and explore the plethora of additional financial data we've put together on the company, just click here.

Blue Nile makes the cut for two of our newsletter services: Motley Fool Hidden Gems and Motley Fool Rule Breakers. To see why, try out either service (or both, if you like!) free for 30 days.

The Knot is also a Rule Breakers pick, and Ctrip keeps Blue Nile company in Hidden Gems. Amazon and eBay are Motley Fool Stock Advisor recommendations.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked 277th out of more than 28,000 raters.