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Are Coinstar Shares a Good Value?

Redbox parent Cointsar’s stock has been in the doldrums ever since the company announced that it would be unable to meet earnings expectations for the fourth quarter of 2010. Shareholders are worried about both Redbox’s near- and long-term investment value.

Finanical site SeekingAlpha, for one, believes that Coinstar stock is at a good price right now and has likely hit bottom. SeekingAlpha believes that Coinstar’s growth of 9.5% over the past five years should be sustainable for the next five.
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SeekingAlpha is not bullish on Coinstar stock as a long-term (five-plus years) investment, however, citing concern about Redbox’s ability to stay competitive in a marketplace that is quickly shifting away from physical media.
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Commenters on the story offer differing opinions, with some believing that Redbox’s business model has more life in it than many believe. Speculation is also running that Coinstar could be picked up by a rival such as Netflix or Amazon or maybe even a Hollywood studio.The general consensus, however, remains that Redbox needs to implement a new side of its business that does not depend on physical discs such as DVDs and Blu-rays.

What do you think, Insiders? What are Redbox’s short- and long-term prospects, and will a streaming or other non-traditional model keep the company relevant for many years to come?

(via SeekingAlpha)

8 Responses to “Are Coinstar Shares a Good Value?”

  1. Visitor [Join Now]
    so true [visitor]

    They are short now that Redbox has new term from Disney that no one is talking about shhhhh!!!!!!!!!!!!

    • Visitor [Join Now]
      so true [visitor]

      Also I expect Lionsgate, Paramount and definatley Sony to wrap a window around Redbox after 2nd quarter. Maybe similar to Disneys non-window window. Thing is whether they call it a window or not it still means less copies available per machine, less profit, less consumer satisfaction, more churn.

      • Visitor [Join Now]
        Firstlawofnature [visitor]

        Cost of product goes down when studios tweak. FSD will keep redbox relevant for years if studios press too hard against the low cost consumer distributors.

        To the coin counting complainer below. You don’t know what you are talking about. Coin counting for a fee has existed for over a decade. It makes perfect sense for many folks to use. Walk into a big bank with a jar of loose change to see why coinstar kiosks exist.

        • Visitor [Join Now]
          Alex [visitor]

          I guess the new Disney terms (raising rates on Redbox) shoots this theory out the window of yours about cost of product going down.

    • Visitor [Join Now]
      Alex [visitor]

      Disney is charging more to Redbox and Netflix the first 42 days then if a customer walked into walmart and bought it in some ways this is worse then a 28 day delay after 6 weeks the titles are old.

  2. Visitor [Join Now]
    John Small [visitor]

    Strange how the rah-rah analysts seem to have missed the Disney implications.

  3. Visitor [Join Now]
    Consumer [visitor]

    Interesting. I noticed that Redbox didn’t carry Beverly Hills Chihuahua 2 and wondered why. I also found Secretariat very difficult to get due to limited copies. This would explain a reason why.

  4. Visitor [Join Now]
    chriss [visitor]

    Redbox growing, ore business, Coin Star losing value. Many competing services now including retailers creating their own hardware and service. There are similar machines and services everywhere undercutting the Coin star fees. When initially launched fees at Coin star were not egregious. Why shouldn’t a retailer enter the market and pocket more? Marketing 101 the barrier of entry was not high enough to discourage competition. Consumers and analysts will wonder when Redbox fees will follow the behavior of the change counting division.

    Coin star is a mess. The partner premium options are not available everywhere. I have to pass 2 dozen Coin star machines and travel 20 miles to find one that offers the Amazon premium. Additionally, these offers move in and out of locations leaving consumers disappointed. This mess of marketing premiums combined with ever increasing rates on a pure margin business turned consumers off and promoted competition that Coin star fails to take seriously. I do not buy the argument of inflation on this one. Many banks provide this service for free and at 10% of the take, shared with location partner the amount is ridiculous. Hey here is a marketing idea for free. Offer a sizable discount for vouchers that can only be used on the retail premises? This driving targeted dollars to the retail partner.

    Disney sells more media ion initial release than any other producer/distributor. My family owns all of the Disney movies. We might only rent one if we were away on vacation but that is unlikely as the digital copies travel with us on our media players. Shhhh the facts are not that impressive regarding Disney rentals.