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Why Is Green Dot (GDOT) Down 1.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Green Dot (GDOT - Free Report) . Shares have lost about 1.4% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Green Dot Surpasses Q2 Earnings & Revenue Estimates

Green Dot reported better-than-expected second quarter 2020 results, with earnings and revenues beating the Zacks Consensus Estimate.

Adjusted earnings of 43 cents beat the consensus estimate by 38.7% but declined 52.2% year over year. Non-GAAP operating revenues of $300 million surpassed the consensus mark by 25.9% and increased 13% year over year.

Segmental Revenues

The Account Services segment’s non-GAAP operating revenues came in at $241 million, up 16.8% from the year-ago quarter’s level. The upside can be attributed to growth in BaaS business. The Processing and Settlement Services segment’s non-GAAP operating revenues of $66.4 million increased marginally from the year-ago quarter’s levels, driven by 11% year-over-year increase in cash transfers.

Key Metrics

Gross dollar volume climbed 50.8% year over year to $15.1 billion. Gross dollar volume from direct deposit sources increased 46.6% year over year to $10.6 million. Purchase volume also rose 31.1% from the prior-year quarter’s figure to $8.5 billion. The company ended the second quarter with 6.2 million active accounts (up 10.4% year over year) and 12.5 million cash transfers (up 11% year over year). The number of tax refunds processed was 1.9 million, down 24.6% year over year.

Operating Results

Adjusted EBITDA of $45.3 million fell 28.2% on a year-over-year basis. Adjusted EBITDA margin of 15.1% also slid from the year-ago quarter’s figure of 28.2%.

Balance Sheet

Green Dot exited the second quarter with cash, cash equivalents and restricted cash balance of $1.93 billion compared with the $1.56 billion witnessed at the end of the prior quarter. The company had no long-term debt. The company generated $161.5 million of cash from operating activities and capex was $31.4 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 122.64% due to these changes.

VGM Scores

At this time, Green Dot has a poor Growth Score of F, 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 second quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Green Dot has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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