According to analyst Michael Pachter at Wedbush Morgan, Coinstar (NASDAQ:CSTR) is going to deliver better than expected earnings on Thursday.

Here’s Pachter’s bullet points for his preview of Coinstar earnings:

Coinstar will report its Q1 2011 (March) results after market close on Thursday, April 28, with a call at 2:00pm PT (www.coinstarinc.com).

We expect Coinstar (NASDAQ:CSTR) to report results at or above our estimates for revenue of $426 million and EPS of $0.26, and well above consensus estimates for revenue of $409 million and EPS of $0.22.  Q1 guidance is for revenue of $400 — 420 million and EPS of $0.15 – 0.25. The inventory issues in Q4 likely negatively affected Q1, due to the 6 – 8 weeks lead time for purchases.

We expect Coinstar (NASDAQ:CSTR) to slightly raise 2011 guidance (for revenue of $1.70 –1.85 billion and EPS of $2.60 – 3.10).  We believe the balance of 2011 has a better release slate, higher demand for Blu-ray, and repair of the inventory issues.

Assuming that the inventory issue is behind it, the company could generate Q2 EPS close to $0.80, well above consensus. Redbox revenues should continue to grow due to a higher average number of kiosks and favorable competitive trends from Blockbuster closings after its acquisition by DISH Network (NASDAQ:DISH).

We think that Coinstar (NASDAQ:CSTR) is a healthy company with solid earnings growth prospects, once it corrects its out-of-control inventory purchase issues from Q4:10. The company’s 2011 EPS guidance implies EPS of at least $1.00 in Q3 and Q4. Coinstar is positioned to deliver earnings above the high end of its guidance in 2011, as we expect the contribution from new kiosks and anticipate normal “aging” of the installed base will result in a 10% comp for the year.

We are confident that Coinstar (NASDAQ:CSTR) can earn over $3.00 in FY:11, and believe that its EPS run rate in the back half of year implies earnings power of $5.00 in FY:12. With this kind of earnings potential, we remain quite comfortable that our $62 price target will be achieved within the next 12 months; but we think another guidance misstep has the potential to cause a modest sell-off in the near term.

Get Your FREE Special Report: 4 Things You Must Know About the US Economy Now!