I was very skeptical of Outerwall's decision to lever up at the all time stock highs to retire common. I was even more skeptical when Jana sold most of their stake into the tender.
The Company always has very uneven results, not because DVDs are going away tomorrow (though they will eventually go away). Box Office revenue is inherently hit driven and lumpy. Viewer habits are fickle and can be diverted by big events like the World Cup and the Olympics. Down here at $53 with a massively shrunken share count, the stock seems way oversold and a good long. The coin business is on track to do about $120mm of EBITDA. I think this business is worth about $1 billion or just over 8x EBITDA. On the current share count, that is $48 a share or almost the entire equity capitalization. With about $890 of net debt, all Redbox has to be worth is 2.6x EBITDA (approximately $340mm and that may be low) to settle the obligation.
Now there is ecoATM, the phone recycle business. Outerwall valued Eco around $350mm with its last round or about $17.5 a share. I would argue that on a sum of the parts. Redbox is worth 3x EBITDA or about $1billion for an enterprise value of $2.35 billion and an equity value net of debt of $73 a share or 35% higher than the current quote.