Conclusion: My 2010 estimates remain very conservative as I’ve not included any ATM wins for the rest of 2009 and 2010. In 2010 I believe the company will grow revenues by 20% to $25.5 Million while growing net income 110% to $0.16 EPS. My expectations are based on 5% growth in ATM business (business already announced) accompanied by a modest roll-out of DVD Kiosks starting in March 2010. The company is also looking at other Kiosk opportunities that if materialize could also boost 2010 performance. The company is currently trading at 9x 2009 EPS, and 4x my 2010 EPS estimate.
My average cost basis is around the current price $0.75
Thanks for sharing your forecast. IMHO the numbers you are suggesting are clearly feasible. They have quite a bit of operating leverage at this point and any ATM business should end up with a pretty good margin. You could be low on the ATM opportunity. The KIOSK opp, however remains highly speculative. It could be as good as you have suggested or it could be nada. I hope you are right.
Regardless, I believe McQuain has assembled a solid team and I am willing to let my money ride based on their solid business acumen. I think they will attach resources to the proper priorities.
And it all comes back to the fact that the stock is trading really at less then 10x 2009 EPS. In my 2009 model I didn't add back in the 2c for Q1 2009 so really they will do 9-10c this year in operating income. Ebitda was really good even with higher capex. Stock should at least be at $1 now and should probably be closer to $2 if/when they really start rolling out the dvd offering.
Redbox tests higher prices By Danny King and Susanne Ault -- Video Business,11/02/2009
NOV. 2 | PHYSICAL: Redbox is testing different prices at some machines in Pennsylvania and New Mexico.
Redbox, which has roughly doubled its kiosk count to about 18,000 because of the popularity of its $1 a night DVD rentals, is charging $2 for first-night rentals in Harrisburg, Penn., and a $1.50 nightly rate in Albuquerque, Redbox spokesman Christopher Goodrich confirmed today. Additional nights at Harrisburg machines revert to the $1 a night rate.
Redbox parent Coinstar CEO Paul Davis said in August that the company would test different DVD pricing models as well as Blu-ray Disc and videogame sales, including some machines dedicated exclusively to renting videogames.
Coinstar, which reports third-quarter earnings later this week, said in August that Redbox’s second-quarter sales more than doubled as the largest U.S. movie-rental kiosk operator added machines and boosted the amount of sales it gets from each kiosk. The unit’s results helped parent company Coinstar double its earnings from a year earlier.
Studios such as Warner Home Video, 20th Century Fox Home Entertainment and Universal Studios Home Entertainment have taken issue with Redbox’s $1 a night rentals and are prohibiting the sale of their new DVD releases to kiosk operators, causing Redbox to file lawsuits against them.