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Green Dot (GDOT) Down 7.7% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Green Dot (GDOT - Free Report) . Shares have lost about 7.7% 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's Tops Q4 Earnings & Revenues Estimates

Green Dot delivered impressive fourth-quarter 2018 results with earnings and revenues beating the Zacks Consensus Estimate.

Adjusted earnings per share (EPS) of 56 cents beat the consensus mark by 6 cents and surged 93.1% year over year. This marks the 10th consecutive quarter of double-digit growth. The bottom line was driven by strong adjusted EBITDA growth, interest income from the investment of cash deposits held at Green Dot Bank and lower year-over-year effective tax rate.

Total operating revenues of $237.8 million outpaced the consensus mark by $1 million and rose 11.6% year over year on the back of 100% organic growth.

Key Metrics

Gross dollar volume grew 16.4% year over year to $9.8 billion. Purchase volume increased 10.9% from the prior-year quarter’s tally to $6.3 billion. The reported quarter ended with 5.3 million active accounts (up nearly 1% y/y) and 10.9 million cash transfers (up 9.6% y/y). The number of tax refunds processed were 0.07 million compared with 0.06 million in the year-ago quarter.

Segmental Revenues

Account Services operating revenues came in at $200.1 million, up 11.1% from the year-ago quarter. The segment benefited from growth in purchase volume and increased retention of customer accounts. Processing and Settlement Services revenues of $45 million, grew 10.9% from the year-ago quarter on the back of organic growth in each of the segment's various product lines.

Operating Results

Adjusted EBITDA of $43.9 million increased 36.8% on a year-over-year basis. Adjusted EBITDA margin of 18.4% increased from 15.1% in the year-ago quarter.

Balance Sheet & Cash Flow

Green Dot exited the quarter with cash, cash equivalents and restricted cash balance of $1.1 billion compared with $1 billion at the end of the prior quarter. The company has no long-term debt.

The company generated $36.7 million of cash from operating activities and spent $17.6 million in capex.

2019 Guidance

The company expects revenues in the range of $1.114-$1.134 billion. Adjusted earnings are anticipated between $3.59 and $3.67. Adjusted EBITDA is expected in the band of $315-$321 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -10.07% due to these changes.

VGM Scores

Currently, Green Dot has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 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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