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Why Is Green Dot (GDOT) Down 17% Since Last Earnings Report?

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Shares of Green Dot Corporation (GDOT - Free Report) have declined 17% since its third-quarter 2019 earnings release on Nov 7, against 0.3% rise of the industry it belongs to.

The price decline can be attributed mainly to disappointing 2019 guidance. Although the company reaffirmed its previous non-GAAP EPS, non-GAAP operating revenues and adjusted EBITDA guidance, it anticipates them to come toward the low end of the guided range.

Management expects full-year non-GAAP EPS to be $2.73, the guided range being $2.71-$2.77. Non-GAAP operating revenues are expected in the range of $1.06-$1.08 billion. Adjusted EBITDA is anticipated between $240 million and $244 million.

Let’s see the quarterly numbers in detail

Earnings and Revenues

Non-GAAP EPS of 20 cents beat the consensus mark of 2 cents but decreased 66.1 % year over year. Non-GAAP operating revenues of $229.2 million beat the consensus mark by 0.4%. Revenues reflected strength in the processing and settlement segment.

Green Dot Corporation Price, Consensus and EPS Surprise

 

 

Account Services segment’s non-GAAP operating revenues came in at $184.3 million, down 5.2% from the year-ago quarter due to decrease in active accounts from the company’s consumer business. Processing and Settlement Services segment’s non-GAAP operating revenues of $51.8 million grew 29.2% from the year-ago quarter driven by increased transaction volumes across product lines.

Key Metrics

Gross dollar volume grew 8.1% year over year to $9.8 billion. Purchase volume increased 2.2% from the prior-year quarter to $6 billion. The reported quarter ended with 5.2 million active accounts (down 4.6% y/y) and 11.7 million cash transfers (up 9.8% y/y). The number of tax refunds processed was 0.11 million compared with 0.1 million in the year-ago quarter.

Operating Results

Adjusted EBITDA of $25.1 million decreased 50.6% on a year-over-year basis. Adjusted EBITDA margin of 11% decreased from 22.4% in the year-ago quarter.

Balance Sheet & Cash Flow

Green Dot exited the quarter with cash, cash equivalents and restricted cash balance of $864.4 million compared with $1.1 billion at the end of the prior quarter. The company has no long-term debt. It generated $37.6 million of cash from operating activities and capex was $20.4 million.

Zacks Rank & Other Stocks to Consider

Green Dot currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few other top-ranked stocks in the broader Zacks Business Services sector are Global Payments (GPN - Free Report) , Mastercard (MA - Free Report) and Cardtronics . While Global Payments sports a Zacks Rank #1, Mastercard and Cardtronics carry a Zacks Rank #2.

Long-term expected EPS (three to five years) growth rate for Global Payments, Mastercard and Cardtronics is 17%, 16% and 4%, respectively.

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