A month has gone by since the last earnings report for Green Dot (GDOT - Free Report) . Shares have added about 4.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Green Dot due for a pullback? 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 Beats on Q1 Earnings, Lowers 2019 EPS Guidance
Green Dot delivered impressive first-quarter 2019 results, with earnings and revenues beating the Zacks Consensus Estimate.
Non-GAAP EPS of $1.51 beat the consensus mark by 9 cents and surged 8% year over year, driven by better operating performance. Non-GAAP operating revenues of $325.7 million missed the consensus mark by $4 million and rose 3.5% year over year on the back of 100% organic growth.
In the quarter, Green Dot made significant developments in both Product and Platform product lines. Demand for its BaaS platform product line increased greatly. The company remains focused on executing its 2019 Six Step Plan.
Gross dollar volume grew 11% year over year to $13 billion. Purchase volume increased 10% from the prior-year quarter to $8.2 billion. The reported quarter ended with 6.1 million active accounts (up nearly 1% y/y) and 11 million cash transfers (up 9% y/y). The number of tax refunds processed was 9.4 million compared with 8.6 million in the year-ago quarter.
Account Services non-GAAP operating revenues were $228.2 million, up 5% from the year-ago quarter, driven by increase in active accounts. Processing and Settlement Services non-GAAP operating revenues of 107.3 million grew 9% from the year-ago quarter, driven by increasing transaction counts in cash transfers and number of tax refunds process to Green Dot TPG.
Adjusted EBITDA of $119 million increased 9% on a year-over-year basis. Adjusted EBITDA margin of 36.5% increased from 35.6% in the year-ago quarter.
Balance Sheet & Cash Flow
Green Dot exited the quarter with cash, cash equivalents and restricted cash balance of $1.7 billion compared with $1.1 billion at the end of the prior quarter. It has no long-term debt. The company generated $115.4 million of cash from operating activities and capex was $19.3 million.
Green Dot lowered its non-GAAP EPS and adjusted EBITDA guidance for 2019. The company now expects non-GAAP EPS to be between $2.82 and $2.91 compared with the previous guidance of $3.59-$3.67. Adjusted EBITDA is expected to be between $255 million and $261 million, representing a 6% year-over-year decline at the mid-point. The previous guidance was $315 million to $321 million. The company continuous to expect full year non-GAAP operating revenues in the range of $1.114 billion to $1.134 billion, the midpoint ($1.124) of which is lower than the Zacks Consensus Estimate of $1.130 billion.
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 -20.13% due to these changes.
At this time, Green Dot has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Green Dot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.