Green Dot Corporation ( GDOT Quick Quote GDOT - Free Report) is benefitting from rapidly developing BaaS platform programs and long-term strategic plan to boost operating as well as financial momentum.
Recently, the company delivered impressive third-quarter 2018 results, with earnings and revenues beating the Zacks Consensus Estimate. Adjusted earnings per share (EPS) of 59 cents beat the consensus estimate by 15 cents and improved 73.5% on a year-over-year basis. Total operating revenues of $230.6 million outpaced the consensus mark by $7.3 million and increased 14.4% year over year on the back of 100% organic growth.
Green Dot has an impressive surprise history. It beat estimates in each of the trailing four quarters, the average being 18.4%.
In a year’s time, the company’s shares have rallied 30.2% compared with the
industry’s rise of 18.2%.
Long-term Strategic Plan
Under the strategic plan to be a ‘New Kind of Bank’ Green Dot is focusing on the use of technology ubiquitous digital and retail brick-and-mortar distribution as well as large partnerships. It is trying to generate solid revenues from increasing customer satisfaction instead of rising customer penalty fees. The strategic plan is generating impressive results on the back of strength in established product lines and BaaS platform programs. Going ahead, these initiatives are expected to increase operating and financial momentum, significantly.
Fast Growing BaaS Platform Programs
The company’s Banking as a Service or BaaS platform programs are growing rapidly. BaaS programs are contributing significantly to Green Dot’s GDV growth, active card growth and revenue growth. To make the platform more productive and increase contribution, Green Dot is investing heavily in a number of large BaaS programs, including programs for Apple, Uber and Intuit. All these programs are expected to improve year over year.
Long-Lasting Relationship With Walmart
The company’s longstanding relationship with Walmart is a key driver of operating revenues. Green Dot 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 and loss management. Walmart provides shelf space to offer Green Dot-branded cards and GoBank checking account products.
Zacks Rank & Other Key Picks
Currently, Green Dot sports a Zacks Rank #1 (Strong Buy). A few other top-ranked stocks in the broader
Business Services sector are WNS (Holdings) Limited ( WNS Quick Quote WNS - Free Report) , General Finance Corporation and Insperity, Inc. ( NSP Quick Quote NSP - Free Report) , each flaunting a Zacks Rank #1. You can see . the complete list of today’s Zacks #1 Rank stocks here
The long-term expected EPS (three to five years) growth rate for WNS, General Finance Corporation and Insperity is 12.5%, 11%, and 18%, respectively.
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