Coinstar stock soars 25% on Redbox growth

chart_ws_stock_coinstarinc.top.pngClick the chart for more on CSTR stock. By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- Shares of Coinstar, the owner of Redbox DVD rental kiosks, surged almost 25% on Friday after the company reported earnings that topped expectations.

Late Thursday, Coinstar (CSTR) said that its net income for the third quarter fell 53%. But earnings came in at 66 cents a share, beating the 50 cents expectation from analysts polled by Thomson Reuters.

Shares closed 24.5% higher Friday.

Coinstar, founded in 1993, has traditionally focused on its network of coin-counting machines in supermarkets. It has been a slow and steady cash cow, but Redbox is quickly taking over the company's growth.

Coinstar's revenue leaped 42% over last year to $380.2 million, driven by Redbox's 54.2% growth to almost $306 million.

By comparison, coin machine revenue ticked up just 7.3% to $75 million.

Customers have responded well to the DVD vending machine model. Redbox movies rent for just $1 a day plus tax, and the company announced in September that it had rented its 1 billionth movie.

Coinstar bought 47% of Redbox in 2005 and obtained the remainder in 2009. It was a shrewd move. The company's stock is up a whopping 107% year-to-date.

Rival Netflix (NFLX) has had an even stronger year: Its stock is up 214% so far in 2010. Last week, the movie rental-by-mail company said it added 1.9 million subscribers in its third quarter. Netflix also predicted growth in online streaming video.

Though Netflix is the market leader for quick and cheap DVD rentals, Coinstar's Redbox is holding its own. On Thursday, the company also forecast fourth-quarter, full-year and 2011 earnings that were stronger than Wall Street's estimates. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,172.68 -107.06 -0.62%
Nasdaq 4,527.69 -52.10 -1.14%
S&P 500 1,994.29 -16.11 -0.80%
Treasuries 2.57 -0.02 -0.81%
Data as of 6:24am ET
Company Price Change % Change
Bank of America Corp... 17.03 0.08 0.47%
Yahoo! Inc 38.65 -2.28 -5.57%
Apple Inc 101.06 0.10 0.10%
EMC Corp 29.68 0.15 0.51%
Facebook Inc 76.80 -1.11 -1.42%
Data as of Sep 22

Sections

Popular messaging app Line, known for its cute emoticons, is shelving plans for an IPO this year. More

UPS announced Monday that it's bringing its in-store 3-D printing service to nearly 100 stores across the country. More

Big pocketed borrowers are paying lower average rates on jumbo loans and lenders are now requiring down payments of just 10% -- and, in some cases, waiving the mortgage insurance, too. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.