Coinstar versus Netfix..Epic Battle For Your TV and Phone (NASDAQ:CSTR, NFLX, NCR, VZ)

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Coinstar, Inc. May Struggle to Move Further Higher (NASDAQ:CSTR, NFLX, NCR, VZ)

It has been a roller coaster movement for Coinstar, Inc.(NASDAQ:CSTR)as the stocks has witnessed a gain of over 37% year to date and recently made an all-time high of $64.85. Moreover, the stock has almost four fold from its pre-recessionary level of about $17.In early March, the company had signed a deal with Universal Studios Home Entertainment that would put Universal DVDs in Redbox kiosks 28 days after their home entertainment release.

Earlier this year, the company Verizon announced a partnership with the company to launch a subscription-based movie rental service.The company has been growing with strong merger & acquisitions over the past 7-8 years with Redbox are among its key successful acquisition. Redbox is the major driver for CSTR constituting 85% of the total revenue. However, there are concerns about rising expenses and other looming challenges at its Redbox DVD-rental kiosks. Late February, analyst at J.P. Morgan downgraded the stock to "neutral" from "overweight" with a price target of $62 a share.

The stock was under pressure in late February as various brokerages raised concerns about how much money Coinstar will have to pay to obtain the Internet video rights to movies and TV shows for a streaming service that it's launching with Verizon Communications Inc. later this year.The company has better historical financial record as revenue grew 30% yearly on an average over the past three-year, while EPS has grown 100% over the same period.However, the company faces strong competition from Netflix, Inc.(NASDAQ:NFLX) and NCR Corporation(NYSE:NCR). Also, rising content cost could hurt the company’s profitability. For FY-11, company reported total revenue of $1.8B, an increase of $401 million. Of the $401 million, the company stated that $206M came from same store sales while $196M came from installation of new kiosks.

The company is scheduled to report its earnings on Apr 26, 2012.Analysts are estimating the company to report 90 cents  a share, compared to a year ago profit of 46 cents a share. Revenue is estimated to grow by 26.80% to $537.66 million, from $424.07 million a year ago.