Just a Lousy Vending Machine Company, YTD Coinstar Hangs With Apple, Other Tech Stocks

Despite a setback Friday, shares of Coinstar (CSTR) are up about 40% so far this year, putting it almost on par with Apple (AAPL) and within shouting distance of gains made year-to-date by LinkedIn (LNKD) and Salesforce.com (CRM).

One of these companies, of course, is not like the others. For all its ties with glitzy Hollywood, and promises of an Internet movie service later this year with Verizon Communications (VZ), Coinstar is just a vending machine company. It’s no Apple, and it doesn’t have the Web buzz of LinkedIn or Salesforce.

CSTR Chart

CSTR data by YCharts

But what Coinstar does have is strong revenue and earnings growth over the past five years and improving profit margins.

CSTR Net Income TTM Chart

CSTR Net Income TTM data by YCharts

In the most recent quarter, which ended March 31, total company revenue rose 23% to $568.2 million, while income from continuing operations jumped 262% to $53.7 million. Margins widened to 13.8% from 7.4% in the same 2011 quarter.

Coinstar’s Redbox division is most of the company, representing about 90% of its revenue. Redbox, which has almost 37,000 kiosks, was able to grow revenues by 39% to $502.9 million on the back of a 28.1% gain in same-store sales.

A price increase last October helped give the company another $0.36 in additional revenue for each rental in the quarter. Continued growth in video game and higher-priced Blu-ray rentals, are also fueling the company’s rise.

Overall, operating income at Redbox rose 222% to $76.4 million, as operating margins in this division hit 15.2% from 6.5% in the same 2011 quarter.

While Coinstar’s DVD business grows, rival Netflix (NFLX) has seen subscribers to its by-mail service drop by about 1 million in its first quarter. Netflix is still trying to recover from the public relations fiasco last year over price increases and the plan, later aborted, to split the company into two units that would have force users of both its DVD and streaming services to do double the log-in legwork.

So far, shares in Coinstar has outpaced Neflix even with Friday’s decline.

CSTR Chart

CSTR data by YCharts

Michael McHugh is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.



Please note that this feature is only available as an add-on to YCharts subscriptions.

Please note that this feature requires full activation of your account and is not permitted during the free trial period.

Start My Free Trial {{root.upsell.info.call_to_action}} No credit card required.

Already a subscriber? Sign in.