Shares of loose-change consolidator Coinstar (NASDAQ:CSTR) plummeted last summer when news broke that supermarket chain Safeway (NYSE:SWY) was going to drop Coinstar's machines. Since then, however, investors have shown renewed confidence in the company. Its Q3 results, released last night, is further encouragement -- but the company still faces no shortage of challenges.

The company yesterday said Q3 revenue rose to $48.7 million from $43.9 million a year ago. Earnings before interest, taxes, depreciation, and amortization improved 15% year-over-year as EBITDA margins widened on the strength of cost controls and scale effects. Net income rose. Approximately 60% of the machines formerly in Safeway stores have found new homes, and are being refurbished.

More good news came in the form of an announcement that Coinstar will expand its relationship with the U.S. division of Dutch supermarket giant Koninklijke Ahold (NYSE:AHO), which operates such Northeastern chains as BI-LO, Stop & Shop, Giant, and others. Coinstar is currently in 660 of Ahold's American stores, and another 250 will be added between now and February.

There are still questions on the horizon. While the company sees room for growth, especially in rural markets, the competitive issues raised by the Safeway move still linger. So, too, are concerns about Coinstar's exposure to key customer Kroger (NYSE:KR) -- Coinstar's largest revenue client -- which wasn't discussed in the earnings release. As Fool Matt Richey discussed in a July article, Kroger has been flirting with a Coinstar competitor.

Coinstar is looking at new business ventures, notably the TOP-UP transaction terminals aimed at convenience stores, but past efforts to broaden the product portfolio have met with mixed success. (Remember Meals.com?) And while Q4 revenues are expected to climb from last year's levels, net income may fall.

Coinstar, for its part, is optimistic. The company repurchased some 340,000 shares in Q3 at an average price of just below $15 each -- about where they closed on Thursday.

Dave Marino-Nachison can be reached at dmarnach@fool.com.