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Walmart Partnership Aids Green Dot (GDOT), Cost Woes Hurt
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Green Dot Corporation (GDOT - Free Report) currently benefits from its strong cash position and a long-standing relationship with Walmart (WMT - Free Report) .
GDOT reported impressive third-quarter 2021 results, with earnings and revenues beating the Zacks Consensus Estimate. Quarterly earnings (excluding 30 cents from non-recurring items) of 43 cents per share surpassed the consensus estimate by 19.4% and increased 72% on a year-over-year basis. Non-GAAP operating revenues of $328.9 million surpassed the consensus mark by 7.9% and increased 18% year over year.
The stock has gained 8.7% in the past six months against a 19.7% decline of the industry it belongs to.
Image Source: Zacks Investment Research
How is Green Dot Doing?
Green Dot’s cash, cash equivalents and restricted cash balance at the end of third-quarter 2021 was $1.8 billion with no debt to clear off. This strong cash position allows the company to invest in opportunities with true potential.
Green Dot’s long-standing relationship with Walmart is a key driver of its operating revenues. The company has been providing Walmart-branded GPS cards since the launch of the Walmart MoneyCard program in 2007. Green Dot Bank has been issuing those card accounts since 2014. The company designs and delivers the Walmart MoneyCard product and provides all ongoing program support, including network IT, website functionality, regulatory and legal compliance, customer service as well as loss management. Walmart provides it with shelf space to offer Green Dot-branded cards and GoBank checking account products. Green Dot’s operating revenues from products and services offered through Walmart contributed 27%, 34% and 36% to total operating revenues in 2020, 2019 and 2018, respectively.
Expense Woes Remain
Green Dot sees an increase in expenses as it continues to invest in sales, marketing and product development. In third-quarter 2021, the company’s total operating expenses increased 13% year over year to $330.6 million. In 2020, total operating expenses of $1.22 billion increased 24.1% year over year. These expenses rose 5.4% year over year in 2019, 18.1% in 2018 and 20.8% in 2017. The bottom line is likely to be under pressure, going forward. Green Dot currently carries a Zacks Rank #3 (Hold). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Avis Budget has an expected earnings growth rate of around 395.65% for the current year. CAR has a trailing four-quarter earnings surprise of 76.9%, on average.
Avis Budget’s shares have surged 648.4% so far this year. CAR has a long-term earnings growth of 27.5%. CAR sport a Zacks #1 Rank.
Automatic Data Processing has an expected earnings growth rate of around 12.3% for the current fiscal year. ADP has a trailing four-quarter earnings surprise of 9.7%, on average.
Automatic Data Processing’s shares have surged 32.3% so far this year. ADP has a long-term earnings growth of 12%. ADP carries a Zacks #2 (Buy) Rank.
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Walmart Partnership Aids Green Dot (GDOT), Cost Woes Hurt
Green Dot Corporation (GDOT - Free Report) currently benefits from its strong cash position and a long-standing relationship with Walmart (WMT - Free Report) .
GDOT reported impressive third-quarter 2021 results, with earnings and revenues beating the Zacks Consensus Estimate. Quarterly earnings (excluding 30 cents from non-recurring items) of 43 cents per share surpassed the consensus estimate by 19.4% and increased 72% on a year-over-year basis. Non-GAAP operating revenues of $328.9 million surpassed the consensus mark by 7.9% and increased 18% year over year.
The stock has gained 8.7% in the past six months against a 19.7% decline of the industry it belongs to.
How is Green Dot Doing?
Green Dot’s cash, cash equivalents and restricted cash balance at the end of third-quarter 2021 was $1.8 billion with no debt to clear off. This strong cash position allows the company to invest in opportunities with true potential.
Green Dot’s long-standing relationship with Walmart is a key driver of its operating revenues. The company has been providing Walmart-branded GPS cards since the launch of the Walmart MoneyCard program in 2007. Green Dot Bank has been issuing those card accounts since 2014. The company designs and delivers the Walmart MoneyCard product and provides all ongoing program support, including network IT, website functionality, regulatory and legal compliance, customer service as well as loss management. Walmart provides it with shelf space to offer Green Dot-branded cards and GoBank checking account products. Green Dot’s operating revenues from products and services offered through Walmart contributed 27%, 34% and 36% to total operating revenues in 2020, 2019 and 2018, respectively.
Expense Woes Remain
Green Dot sees an increase in expenses as it continues to invest in sales, marketing and product development. In third-quarter 2021, the company’s total operating expenses increased 13% year over year to $330.6 million. In 2020, total operating expenses of $1.22 billion increased 24.1% year over year. These expenses rose 5.4% year over year in 2019, 18.1% in 2018 and 20.8% in 2017. The bottom line is likely to be under pressure, going forward.
Green Dot currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Some better-ranked stocks in the broader Zacks Business Services sector are Avis Budget (CAR - Free Report) and Automatic Data Processing (ADP - Free Report) .
Avis Budget has an expected earnings growth rate of around 395.65% for the current year. CAR has a trailing four-quarter earnings surprise of 76.9%, on average.
Avis Budget’s shares have surged 648.4% so far this year. CAR has a long-term earnings growth of 27.5%. CAR sport a Zacks #1 Rank.
Automatic Data Processing has an expected earnings growth rate of around 12.3% for the current fiscal year. ADP has a trailing four-quarter earnings surprise of 9.7%, on average.
Automatic Data Processing’s shares have surged 32.3% so far this year. ADP has a long-term earnings growth of 12%. ADP carries a Zacks #2 (Buy) Rank.