If you have ever had to convert your jar of change into crisp dollar notes, you are probably familiar with Coinstar (CSTR) kiosks found in grocery stores like Albertsons. The fee Coinstar charges to count your change is 8.9 cents per dollar or in other words 8.9%, a steep fee that translates into high profits for the company and shareholders. In fact recent investors in Coinstar are probably a happy lot, watching their investment appreciate a whopping 54% over the last four months and a little over 35% over the last year. The reason behind this sudden euphoria for a business as mundane as counting coins?
In addition to grocery stores, the company is now targeting financial institutions with a new line of smaller and quieter coin-counting kiosks that allow banks and credit unions decide the fee they would like to charge their customers for counting coins. Coinstar is also diversifying its revenue stream by bringing “Disney Kiddie Rides” to store fronts and has a stake in the DVD rental kiosk company redbox.