Coinstar
Last week, Netflix
Coinstar's miss suggests that it is not getting the benefit from the decline in Blockbuster and MovieGallery that the company expected. So, how can Coinstar regain its mojo as an impulse-shopper alternative to the subscription Netflix model? In a recent Bloomberg article, Ralph Schackart, analyst at William Blair & Co., speculated that Coinstar may need to compete with Netflix in the digital streaming market. Schackart speculates that Coinstar might work with Sonic Solutions
Is Wall Street over-reacting and is now a good buying opportunity? Or are Coinstar's revised forecasts a good reason to stay away from this stock? We looked to Motley Fool CAPS contributor icu81mi to weigh in on what the earnings miss means for Coinstar:
Today's sell-off was underdone if you ask me. This is one valuation that I just can't wrap my head around. A 25 P/E for a company that rents out movies on a dying format for a dollar a day? No, just no. There is absolutely not enough growth in that model to sustain to sustain this kind of multiple, not to mention all the debt they're taking on to fuel their expansion. Coinstar knows this too so they throw out "teasers" every once in a while about a possible streaming service to boost sentiment. Think about it. Even if streaming did somehow fit into Coinstar's model which it doesn't, what are the chances they can take any significant market share away from Netflix who utterly dominates that niche? The only thing I can see giving Coinstar a boost in the coming months is if Blockbuster ceases operations permanently in which case I would have to reevaluate.
Do you agree that Coinstar still looks overpriced and uninspiring? Click over to CAPS and let the rest of the community know what you think.