A month has gone by since the last earnings report for Green Dot (GDOT). Shares have lost about 16.5% 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 drivers.
Green Dot Beats Q3 Earnings Estimates
Green Dot delivered mixed third-quarter 2019 results, wherein earnings beat the Zacks Consensus Estimate but revenues lagged the same. Non-GAAP EPS of 20 cents beat the consensus mark by 18 cents but decreased 66.1 % year over year. Non-GAAP operating revenues of $229.2 million miss the consensus mark by 0.4%.
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.
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.
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.
Green Dot 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.
How Have Estimates Been Moving Since Then?
Estimates review followed a downward path over the past two months. The consensus estimate has shifted -121.11% due to these changes.
At this time, Green Dot has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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.
Green Dot has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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