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Coinstar Shares Popped: What You Need to Know

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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.


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Tim Beyers
TMFMileHigh

Tim Beyers first began writing for the Fool in 2003. Today, he's an analyst for Motley Fool Rule Breakers and Motley Fool Supernova. At Fool.com, he covers disruptive ideas in technology and entertainment, though you'll most often find him writing and talking about the business of comics. Find him online at timbeyers.me or send email to tbeyers@fool.com. For more insights, follow Tim on Google+ and Twitter.

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