Coinstar Earnings Preview: Results Likely Positive - (CSTR), Verizon Communications (NYSE:VZ)

Coinstar

CSTR

will report Q2 results on July 26 after market close.

Key points that will have positive impact:

The company had previously issued guidance for revenue growth of 21-26 percent.</li)
Coinstar raised rental prices last year and grew the number of kiosks.
There has been an increase in the number of new DVD releases.
Average EPS estimates are for $1.17 and revenues of $545 million.
Coinstar has had five consecutive quarters of revenue increases, but the NCR acquisition and subsequent spending will likely break that trend.
Earnings trended down Q4 of 2011.

In June, Coinstar completed the acquisition of NCR's DVD kiosk business and stated that it will result in a decrease of $0.40 - $0.50 to the bottom line this year. Analysts believe that ultimately the deal will be positive starting in 2013. Redbox has eliminated a competitor and expanded its base. The NCR deal was not included in 2012 guidance. Coinstar has partnered with Verizon Communications Inc

in a venture announced back in February to provide digital streaming content through Verizon's FiOS service. Coinstar's strong double digit growth over the last year has most analysts bullish with an average “Buy” rating and 12 month mean target price of $83.33. Given management's usually conservative guidance, it may do quite well. Not everyone agrees, Jim Chanos believes that their business is flawed,

and is short Coinstar

. Coinstar had been trading in a bullish triangle and has now broken down from that trend and the 50 day moving average. The company is now in a markdown or distribution phase and there is a support line at $58 and the 200 day moving average is below at $55.87.

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