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.
HSBC banker arrested at JFK airport as he prepared to leave the country. He and former trader face federal charges they manipulated currency trades. More
Bernie Sanders takes credit for forcing for forcing Hillary Clinton and the entire Democratic Party to get a lot tougher on Wall Street. But how likely is that to happen? More
Xiaomi's new laptop looks an awful lot like Apple's MacBook Air. It's even called the "Mi Notebook Air." More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
Only 3% of employers offer so-called "vacation stipends" that help pay for their employees' vacations. But those that do make taking time off a must. More