In post World War II Japan these types of convenience machines took off and were integrated into everyday Japanese life, but in the US they were slow to be accepted on any broad scale. Most vending machines were relegated to schools, offices and other work centers where they ended up in break rooms dispensing cant bars, potato chips and soft drinks. It was only with the development of a system interconnect these machines to each other and to a computer based back end were they able to send inventory information back and forth as well as accept payment for services that they started to reach critical mass. Today these machines can be found in almost every major retail establishment. People feel comfortable enough interacting with these machines that I expect this the use of these machines will only grow further and expand as this company adapts this technology to more and more product categories.
Outerwall Inc. provides automated retail solutions primarily in the United States, Canada, Puerto Rico, Ireland, and the United Kingdom. Its Redbox segment owns and operates approximately 43,680 Redbox kiosks in 36,140 locations that enable consumers to rent or purchase movies and video games. The company’s Coinstar segment owns and operates approximately 21,340 coin-counting kiosks in 20,250 locations, which enable consumers to convert their coin to cash, convert coins and paper bills to stored value products, and exchange gift cards for cash. Its New Ventures segment focuses on identifying, evaluating, building, acquiring, and developing innovative self-service concepts in the automated retail space. Outerwall Inc.’s kiosks are located primarily in supermarkets, drug stores, mass merchants, financial institutions, convenience stores, malls, and restaurants. The company was formerly known as Coinstar, Inc. and changed its name to Outerwall Inc. in April 2013. Outerwall Inc. was founded in 1989 and is based in Bellevue, Washington.
(Summary) (Company) (Daily Chart)
9 August 2015
1yr Target $79.71
Payout Ratio 17.99%
1yr Cap Gain 22.08%
1yr Tot Return 23.92%
Market Cap $1.18 Bil
1yr EarnGR -16.40%
3yr EarnGR 16.28%
5yr EarnGR 23.95%
1yr DivGR ---
3yr DivGR ---
5yr DivGR ---
Revenues $2.31 Bil
Earnings $125.70 Mil
EPS (ttm) $6.67
EPS next yr $7.96
The company was founded in 1991 as Coinstar Inc., an organization providing self service kiosks that allowed consumers to convert their coins into cash or stored value products.
In February 2009, Coinstar became the sole owner of the company "Redbox", a business where consumers can rent or purchase movies and video games from self service kiosks, by buying the 47% share owned by McDonalds for $175 million.
On June 28, 2013, shareholders voted to change the company name from Coinstar to Outerwall to remove the association to only one portion of the new company. The on July 2, 2013, Coinstar expanded again by acquiring mobile phone recycling kiosk operators ecoATM for $350 million (not including debt).
Redbox operates 43,680 kiosks in 36,140 locations where consumers can rent or purchase movies and video games. These kiosks are located in the U.S., Canada and Puerto Rico, and are installed primarily at leading grocery stores, mass retailers, drug stores, restaurants and convenience stores including Walgreens, Walmart, Kroger and 7-Eleven. The Redbox kiosks supply the functionality of a traditional video rental store yet typically occupy an area of less than ten square feet. Consumers use a touch screen to select their titles, swipe a valid credit or debit card, and receive their movie(s) or video game(s). The process is designed to be fast, efficient and fully automated. Outerwall generates revenue primarily through fees charged to rent or purchase a movie or video game, and they pay retailers a percentage of the revenue. Typically, the daily rental fee at a Redbox kiosk is a flat fee plus tax for each disc and, if the consumer chooses to keep the movie or video game for additional days, the consumer is charged for each additional day at the same daily rental fee. Consumers are able to rent any movie or video game from one location and return it to any other Redbox location without an additional charge. Additionally, consumers can reserve a movie or video game online or with the smart phone application and pick it up at the selected Redbox location.
Coinstar owns and operates 21,340 kiosks in 20,250 locations. Consumers simply their feed loose change into a coin counting kiosks, which counts the change and dispenses a voucher redeemable for cash or, in some cases, issues stored value products at the consumer’s election. In addition, a limited number of kiosks can exchange gift cards for a voucher redeemable for cash. Coinstar kiosks are available throughout the U.S., Canada, Puerto Rico, Ireland and the United Kingdom, where they provide a convenient and trouble-free service to retailers such as Kroger and Walmart. Coinstar kiosks are the only multi-national, fully automated network of self-service coin counting kiosks.
The New Ventures portion of the company identifies, evaluates, builds or acquires and develops innovative self-service concepts in the automated retail space segment. The self-service kiosk concept Outerwall is currently exploring in the marketplace is a consumer product sampling concept SAMPLE it , in the Beauty and Consumer Packaged Goods sector.
In the Electronics sector Outerwall acquired and continues to build the ecoATM business which provides an automated self-service kiosk where consumers can recycle mobile devices for cash and generates revenue through the sale of devices collected at our kiosks to third parties. The company began reporting the results of this business in our New Ventures segment subsequent to its acquisition in the third quarter of 2013. The company ended 2014 with approximately 1,890 kiosks in service.
Strategic Investments. Outerwall continually looks at additional uses of its kiosk concept and may make strategic investments in external companies that provide automated self service kiosk solutions. In the Health sector the company has invested in SoloHealth, a kiosk which dispenses pharmaceuticals or medicines.
I think this company's possibilities are almost limitless and that any product small enough to fit into a vending machine can be sold this way 24 hours per day with minimal personal costs. Virtually any high traffic non-commercial area could support these kiosks to provide individuals with personal care products, electronic products and consumables in a more convenient manner that having to search out local stores. I intend to put this company on my watch list to monitor their progress and see if this company is going to push this company forward. I may even obtain a small position just to keep an eye on the company. The recent pullback in the price of the stock makes it easy for me to justify acquiring a small position, especially since the CEO is also increasing the number of shares he owns. I like the Redbox portion but the Coinstar portion is probably too much of a niche product for me. I personally believe the company needs to energize its New Ventures portion of the company and expand rapidly into new areas. They have proven the kiosk concept is a successful concept, they just need to grow the industry.