Coinstar Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Coinstar (Nasdaq: CSTR  ) rose as much as 11% in intraday trading when the Redbox operator's first-quarter financial results and Q2 guidance easily beat estimates.

So what: Volume helped Coinstar overcome higher operating costs. Overall revenue surged 31% to $424.1 million. Sales from Redbox DVD rentals increased 38% and now account for 85.4% of revenue. Adjusted profit improved 53% to $0.46 a share. Wall Street had been calling for $409.4 million in revenue and $0.22 a share in adjusted earnings.

Now what: But if investors liked the Q1 results, they loved management's Q2 guidance. Executives expect Coinstar to take in $0.76 to $0.86 a share in adjusted profits on $430 million to $450 million in revenue. Analysts had been calling for $0.68 and $432.7 million, respectively, Yahoo! Finance reports.

Video games will play a role in producing those numbers. In June, Coinstar will begin renting popular titles via its Redbox kiosks, forcing Netflix (Nasdaq: NFLX  ) to find a way to respond. Well-played, sirs.

Interested in more info on Coinstar? Add it to your watchlist.

Interested in more info on Netflix? Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. Netflix is a Motley Fool Stock Advisor selection. Alpha Newsletter Account LLC has purchased Netflix puts. You can try any of our Foolish newsletter services free for 30 days.

Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is at least 10% better than other disclosure policies.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1485399, ~/Articles/ArticleHandler.aspx, 11/26/2014 10:32:38 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement