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Green Dot (GDOT) Down 0.6% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Green Dot (GDOT). Shares have lost about 0.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Green Dot due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Green Dot Surpasses Q3 Earnings & Revenue Estimates

Green Dot Corporationreported impressive third-quarter 2020 results beating the Zacks Consensus Estimate on both earnings and revenues.

Quarterly adjusted earnings of 25 cents beat the consensus estimate by more than 100% and increased 25% year over year. Non-GAAP operating revenues of $279.4 million surpassed the consensus mark by 12.3% and improved 25% year over year.

Segmental Revenues

The Account Services segment’s non-GAAP operating revenues came in at $228.4 million, up 24% from the year-ago quarter. The Processing and Settlement Services segment’s non-GAAP operating revenues of $57.5 million grew 11% year over year

Key Metrics

Gross dollar volume climbed 47% year over year to $14.5 billion. Gross dollar volume from direct deposit sources increased 39% year over year to $9.5 billion. Purchase volume also inched up 26% from the prior-year quarter to $7.6 billion. The company ended the second quarter with 5.7 million active accounts (up 10%) and 12.8 million cash transfers (up 9% year over year). The number of tax refunds processed was 0.8 million, up more than 100% year over year.

Operating Results

Adjusted EBITDA of $33.7 million increased 34.3% on a year-over-year basis. Adjusted EBITDA margin of 12.1% was up from the year-ago quarter’s 11%.

Balance Sheet

Green Dot exited the quarter with cash, cash equivalents and restricted cash balance of $2.1 billion compared with the $1.9 billion witnessed at the end of the prior quarter. The company had no long-term debt. The company generated $37.3 million of cash from operating activities and capex was $12.5 million.

2020 Guidance

The company expects 2020 non-GAAP total operating revenues to be in the range of $1.175 billion to $1.185 billion. Non-GAAP EPS is expected to be between $1.95 and $2.00. Adjusted EBITDA is anticipated to be between $195 million to $200 million.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -55.56% due to these changes.

VGM Scores

Currently, Green Dot has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Green Dot has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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