Analyst: Here’s What Investors Need to Know About Coinstar’s Earnings

The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.

Coinstar’s (NASDAQ:CSTR) EPS was above the high end of guidance despite another comps decline, demonstrating solid inventory management and tight cost control. Revenue was $564 million, compared with our estimate of $600 million, the consensus estimate of $579 million, and guidance of $552 – 302 million. NonGAAP EPS was $0.93, compared with our estimate of $0.80, the consensus estimate of $0.72, and guidance of at or above the high end of $0.62 – 0.77. Margins were better than expected due to better execution on inventory, and significantly better cost control than we expected.

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Overall Redbox revenue continues to grow. Redbox revenue grew 9.6% in a difficult quarter, and grew 22.2% for the full year.  While the rate of growth has slowed, revenues are still growing, and we expect further growth in 2013.

Year-over-year earnings guidance reflects an operating margin decline, notwithstanding an 23% increase in average kiosks. It is clear that Redbox is approaching market saturation, adding 8,300 kiosks to end 2012 at 43,700 kiosks. Guidance for 2013 suggests Redbox revenues will grow by 9 – 17% for the year, notwithstanding a 23% in average kiosks. Once again, investors should expect…