One or two analysts have mentioned PEs. I think going forward CSTR's stock price will be all about PE ratios. We need a bit more consistency to convince the analyst community that this isn't a fluke that fizzles out in 2 years when DVDs get disrupted by something new such as streaming or little electronic bumble bees or whatever comes next... after the strategy convinces the investment pundits that this is a strongly led company (which is my personal feeling based on the mgmt. decisions the past 6 months) - the PE should come into balance. I have said this before but when I do the math I get $5.00 minimum annual earnings times a PE of 15 equals $75. Earnings of $5.50 yields a PE of $82.50. If the PE and Earnings BOTH rise then we get to a PE of around $100 or more. This is a rational analysis and what needs to make this happen is consistently strong management (which we've already seen) and earnings to beat the current estimates which is likely given the fact that most of the growth initiatives haven't kicked in yet.
Also, keep in mind that past earnings stay in the company's pocket.
What I mean is, For 2011, CSTR earned $3.29 per share. For 2012, the company will earn about $5.00 or more, for 2013, it should earn $5.50 or $6.00 again. Assuming the company doesn't increase R&D or Executives salaries, that's all money sitting in the bank. 3.29+5+5.5=$13.79
So, for 2014, when those P/E and earnings projections are made and a new stock price is determined, that $13.50+ in cash should be added back into the stock price. So whatever, stock price is projected forward to 2014, another $10 or $15 should be added on top of it.
Site.. Settle down bucko. The business model, vending is the genuis here. Mngmt has been inconsistent. Three qtrs ago they mismanaged product and placement and the stock suffered a sharp reversal. These past 2 qtrs have benefitted from Nflx near abandonment of the physical dvd.
The kiosk is the low cost mechanism. No postage, self service, and with its excellent placements at grocery stores, mini-markets & drug stores, its convenient.
What is to stop cstr from entering the cd mailing business and directly competing with nflx?
And for that matter what is to stop cstr from streaming the video just as nflx.
Who has more content cstr or nflx?
You are exactly right.
Earnings between $5.25 and $6.00 times a P/E ratio of 17 gives us a stock price between $89.25 and $102.00.
Now we just have to see whether earnings are closer to $5.25 or $6.00.
With this lower guidance, expected earnings are now $4.75ish (Yahoo=$4.74 and Motley Fool article=$4.79). If we put a multiple of 17 on that, we get a price of just over $80.00.
It's still a good buy even after last night's earnings report and conference call.