CSTR 042612
Coinstar Inc.
(CSTR)
Coinstar operates
more than 35,500 Redbox DVD rental kiosks and 20,250 Coinstar
coin-counting brands all across the country. Part of their
strategy and success is their strategic placement of their kiosks
(DVD and coins) as well as their partnerships with other major
companies like StarBucks, Lowes, CVS, Maggianos and more.
These partnerships not only allow Coinstar users to get the entire
value of their change towards a gift card, but the subsidies and
mutual relationships with other vendors add to Coinstar’s revenue
and visibility.
A Blowout Quarter
(Reiterated)
On April 16th, I thought Coinstar was worthy of a Zacks Momentum
mention after the company pre-announced estimates much ahead than
expectations which reinforced their strong growth and market share
capture from the likes of Netflix. Given the actual results
yesterday and the subsequent drop in price, the shares may still
look attractive here.
Shares were trading roughly $65 at the time that article was
published. I noted in detail that “Coinstar is making all time
highs as the stock trades up towards $70. While momentum is
on its side, it might be prudent to let the stock settle down a bit
and find support.”
Support came right at the 50 day moving average of about $62,
which acted as a trampoline; sending shares back up towards the $70
mark. At the time of this writing, shares were down in the
post market to $65 a share, back around the same level.
Details of the
Report
Ahead of yesterday’s report, the Zacks consensus estimate was for
$1.42 per share, up from 87 cents just a few weeks ago.
Coinstar managed to blowout earlier estimates with Q1 (core
diluted) earnings of $1.39, but missed the Zacks Consensus, which
sent the stock lower.
There was no doubt the Coinstar is executing well. Consolidated
revenue from their coin business and Redbox was $568.2 million, up
from $424 million in the same quarter a year ago. Diluted EPS
from continuing operations of $1.65, an increase of 258.7% compared
with $14.8 million, or $0.46 per share, in the first quarter of
2011. Q1 Core diluted EPS from continuing operations was $1.39 per
share versus $0.46 per share in the same period last year.
Looking Ahead
On the call, executives reminded investors that the Redbox digital
solution, which is a joint venture with Verizon will be pressing
forward in 2012 as well as “the rollout of one to two of our new
venture businesses.” I wonder what will come next for
CSTR?
For Q2
2012, Coinstar expects consolidated revenue to come in between $525
million and $550 million; core adjusted EBITDA from continuing
operations* between $114 million and $124 million and core diluted
EPS between $1.09 and $1.24, Zacks Consensus Estimates were for
$1.07 in Q2 core diluted EPS.
The stock is remains a Zacks Rank 1 Buy.
This Week's
Momentum Zacks Rank Buy Stocks:
Tata Motors (TTM)
Watching the Q2 earnings season unfold, there is strength coming
from transportation. Here in the U.S., car and truck
manufacturers, retailers and even shipping companies are delivering
strong results on average.
Tata Motors is a
slightly different company when compared to the typical US
automaker. With roots going all the way back to 1868, they
are well known in India for producing no-frills economy cars for
the masses, their “Nano” model is considered “The Peoples Car” of
India.
Around the globe
they offer more economy and upscale brands of automobiles and
provide transport and technology solutions for governments.
TTM is more of a
conglomerate than just an autos company. The Tata group
comprises over 100 companies in seven sectors: communications and
information technology, engineering, materials, services, energy,
consumer products and chemicals. Tata has operations in more than
80 countries and exports products and services to 85 countries all
together.
Tata Steel is one
of the top ten steelmakers and Tata Motors is one of the top five
commercial vehicle manufacturers in the world. TCS is a leading
global software company and Tata Global Beverages is the
second-largest player in tea in the world. If that wasn’t enough
Tata Chemicals is the world's second-largest manufacturer of soda
ash and Tata Communications is one of the world's largest wholesale
voice carriers. Did I mention that they also own Land Rover
and Jaguar? READ FULL STORY
PPG Industries (PPG)
Even with the weakness in Europe, the coatings giant PPG is still
seeing strong growth in the U.S. and other emerging markets,
propelling it to new 52 week highs. A majority of PPG’s
business is derived from OEM automotive coatings and coating
innovations since 1924. Being that auto and truck sales have
been relatively strong in recent months and the trends seem to be
improving PPG may stand to benefit further from increased
production of not just autos, but all types of manufacturing that
requires their coatings. They may be the automotive
derivative trade you haven't thought of.
PPG was recently
featured in our Investment Ideas column for its healthy dividend
yield and stable growth. READ FULL STORY
Sonic Automotive (SAH)
Rarely will a stock that misses earnings estimates be selected as a
momentum rank-buy; but given the details of the report, Sonic may
have upside from these levels.
Sonic has held
above its 200 day moving average and been in an upward trend since
October. Yesterday’s selloff following an earnings miss sent
shares down roughly 9%, which may actually attractive buyers at
advantageous prices and allow the momentum in this stock to
continue. With a P/E of less than 10, a PEG ratio of 0.6 and
relatively strong growth since the recession, Sonic’s shares may
have value here.
Automotive sales
have been on the rise over the past several months and the trend
seems to be continuing according to sources. READ FULL STORY
Tractor Supply Company
(TSCO)
is operating on all cylinders. The farm and ranch retailer
recently preannounced first quarter sales that topped $1 billion
for the first time in the company's history. Shares of this Zacks
#1 Rank (Strong Buy) continue to scream higher, hitting new
all-time highs almost daily.
Tractor Supply
Company operates 1117 stores in 44 states that supply products for
recreational farmers and ranchers. The retailer focuses on the
needs of those who live in rural areas, including tradesmen and
small businesses.
The company
offers merchandise in areas such as equine, pet and small animal
products; hardware, truck and towing products; seasonal lawn and
garden products; maintenance products; and recreational clothing
and footwear. READ FULL STORY
Jared A Levy is
the Senior Stock Strategist for Zacks.com. He is also the Editor in
charge of the market-beating Zacks Whisper Trader Service.
COINSTAR INC (CSTR): Free Stock Analysis Report
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