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Coinstar
Inc. (CSTR)
Coinstar
operates more than 35,500 Redbox DVD rental kiosks and 20,250 Coinstar
coin-counting brands all across the country.
Part of their strategy and success is their strategic placement of
their
kiosks (DVD and coins) as well as their partnerships with other major
companies
like StarBucks, Lowes, CVS, Maggianos and more.
These partnerships not only allow Coinstar users to get the entire
value
of their change towards a gift card, but the subsidies and mutual
relationships
with other vendors add to Coinstar’s revenue and visibility.
A Blowout
Quarter (Reiterated)
On April 16th, I thought Coinstar was worthy of a Zacks Momentum
mention
after the company pre-announced estimates much ahead than expectations
which
reinforced their strong growth and market share capture from the likes
of
Netflix. Given the actual results yesterday and the subsequent drop in
price,
the shares may still look attractive here.
Shares were trading roughly $65 at the time that article
was
published. I noted in detail that “Coinstar is making all time highs as
the
stock trades up towards $70. While momentum is on its side,
it might be
prudent to let the stock settle down a bit and find support.”
Support came right at the 50 day moving average of about $62,
which acted as
a trampoline; sending shares back up towards the $70 mark. At
the time of this writing, shares were down
in the post market to $65 a share, back around the same level.
Details of the
Report
Ahead of yesterday’s report, the Zacks consensus estimate was for $1.42
per
share, up from 87 cents just a few weeks ago. Coinstar
managed to blowout
earlier estimates with Q1 (core diluted) earnings of $1.39, but missed
the
Zacks Consensus, which sent the stock lower.
There was no doubt the Coinstar is executing well.
Consolidated revenue from
their coin business and Redbox was $568.2 million, up from $424 million
in the
same quarter a year ago. Diluted EPS
from continuing operations of $1.65, an increase of 258.7% compared
with $14.8
million, or $0.46 per share, in the first quarter of 2011. Q1 Core
diluted EPS
from continuing operations was $1.39 per share versus $0.46 per share
in the
same period last year.
Looking Ahead
On the call, executives reminded
investors that the Redbox digital solution, which is a joint venture
with
Verizon will be pressing forward in 2012 as well as “the rollout of one
to two
of our new venture businesses.” I wonder
what will come next for CSTR?
For
Q2 2012, Coinstar expects consolidated
revenue to come in between $525 million and $550 million; core adjusted
EBITDA
from continuing operations* between $114 million and $124 million and
core
diluted EPS between $1.09 and $1.24, Zacks Consensus Estimates were for
$1.07
in Q2 core diluted EPS.
The stock is remains a Zacks Rank 1 Buy.
This
Week’s Momentum Zacks Rank Buy Stocks:
Tata Motors (TTM)
Watching the Q2 earnings season
unfold, there is strength coming from transportation. Here in
the U.S.,
car and truck manufacturers, retailers and even shipping companies are
delivering strong results on average.
Tata
Motors is a slightly different
company when compared to the typical US automaker. With roots
going all
the way back to 1868, they are well known in India for producing
no-frills
economy cars for the masses, their “Nano” model is considered “The
Peoples Car”
of India.
Around
the globe they offer more
economy and upscale brands of automobiles and provide transport and
technology
solutions for governments.
TTM is
more of a conglomerate than
just an autos company. The Tata group comprises over 100
companies in
seven sectors: communications and information technology, engineering,
materials, services, energy, consumer products and chemicals. Tata has
operations in more than 80 countries and exports products and services
to 85
countries all together.
Tata
Steel is one of the top ten
steelmakers and Tata Motors is one of the top five commercial vehicle
manufacturers in the world. TCS is a leading global software company
and Tata
Global Beverages is the second-largest player in tea in the world. If
that
wasn’t enough Tata Chemicals is the world’s second-largest manufacturer
of soda
ash and Tata Communications is one of the world’s largest wholesale
voice
carriers. Did I mention that they also
own Land Rover and Jaguar? READ
FULL STORY
PPG Industries (PPG)
Even with the weakness in Europe,
the coatings giant PPG is still seeing strong growth in the U.S. and
other
emerging markets, propelling it to new 52 week
highs. A majority of
PPG’s business is derived from OEM automotive coatings and coating
innovations
since 1924. Being that auto and truck sales have been
relatively strong
in recent months and the trends seem to be improving PPG may stand to
benefit
further from increased production of not just autos, but all types of
manufacturing that requires their coatings. They may be the
automotive
derivative trade you haven’t thought of.
PPG
was recently featured in our Investment
Ideas column for its healthy dividend yield and stable
growth. READ
FULL STORY
Sonic Automotive (SAH)
Rarely will a stock that misses
earnings estimates be selected as a momentum rank-buy; but given the
details of
the report, Sonic may have upside from these levels.
Sonic
has held above its 200 day
moving average and been in an upward trend since October.
Yesterday’s
selloff following an earnings miss sent shares down roughly 9%, which
may
actually attractive buyers at advantageous prices and allow
the momentum
in this stock to continue. With a P/E of less than 10, a PEG
ratio of 0.6
and relatively strong growth since the recession, Sonic’s shares may
have value
here.
Automotive
sales have been on the rise
over the past several months and the trend seems to be continuing
according to
sources. READ
FULL STORY
Tractor Supply Company (TSCO)
is operating on all cylinders. The farm and
ranch retailer recently preannounced first quarter sales that topped $1
billion
for the first time in the company’s history. Shares of this Zacks #1
Rank
(Strong Buy) continue to scream higher, hitting new all-time highs
almost
daily.
Tractor
Supply Company operates 1117
stores in 44 states that supply products for recreational farmers and
ranchers.
The retailer focuses on the needs of those who live in rural areas,
including
tradesmen and small businesses.
The
company offers merchandise in
areas such as equine, pet and small animal products; hardware, truck
and towing
products; seasonal lawn and garden products; maintenance products; and
recreational clothing and footwear. READ
FULL
STORY
Jared
A Levy is the Senior
Stock Strategist for Zacks.com. He is also the Editor in charge of the
market-beating Zacks
Whisper
Trader Service.
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