Green Dot (GDOT) Rides on Long Standing Relation With Walmart
Green Dot Corporation’s GDOT increasing investments in products and platform components are likely to benefit its long-term business prospects. The company has a praiseworthy tactic of broadening its target market via banking-as-a-service account programs.
Green Dot reported strong second-quarter 2023 results, wherein earnings and revenues beat the Zacks Consensus Estimate.
Quarterly non-GAAP earnings (excluding 36 cents from non-recurring items) of 37 cents per share surpassed the consensus estimate by 8.8%. Nonetheless, the bottom line decreased 50% on a year-over-year basis. Non-GAAP operating revenues of $361.1 million also outpaced the consensus mark by 8.7% but declined marginally year over year.
Green Dot Corporation Price and Consensus
Green Dot Corporation price-consensus-chart | Green Dot Corporation Quote
In the year-to-date period GDOT has lost 1.4% while its industry has gained 11% in the same period.
Factors Boding Well
Green Dot focuses on securing sustainable business growth by acquiring long-term product users, improving brand image, increasing market adoption, boosting card usage, and retaining a diverse customer base, which spans from unbanked to fully banked consumers.
Green Dot's enduring Walmart partnership greatly fuels its revenues. Since Walmart MoneyCard's inception in 2007, Green Dot has supplied branded GPS cards, with Green Dot Bank handling accounts since 2014. Green Dot manages design, support and compliance, while Walmart provides shelf space. Walmart-related earnings constituted 21%, 24%, and 27% of Green Dot's total in 2022, 2021, and 2020 respectively.
Green Dot widens its market via banking-as-a-service (BaaS) programs, partnering with top companies like Amazon, Apple, Intuit, and Uber. Their fintech solutions, developed on Green Dot's BaaS platform, extend the company's consumer spectrum when integrated into partner offerings.
Unfavorable Factors
Green Dot's current ratio at the end of the second quarter was pegged at 0.36, lower than the prior-year quarter’s 0.37. It indicates that the company may have problems meeting its short-term debt obligations.
Green Dot's heavy investment in sales, marketing, and product development led to $1.37 billion in 2021 expenses, up 11.7% year over year. Despite a minor 2022 decrease, ongoing pressure on the bottom line is anticipated.
Zacks Rank and Stocks to Consider
GDOT currently carries a Zacks Rank #3 (Hold).
Investors interested in Zacks Business Services sector can consider the following stocks:
ICF InternationalICFI holds a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings for 2023 are expected to grow 8.8% while revenues are anticipated go up 10.8% year over year. ICFI has an impressive earnings surprise of 6.95% in the past four quarters, having beaten the Zacks Consensus Estimate in all four trailing quarters.
CRA InternationalCRAI carries a Zacks Rank of 2. Earnings for 2023 are expected to go down 7.9% while revenues are expected to grow 6.7% from the year-ago reported figures. CRAI has a decent earnings surprise of 5.13% in the past four quarters, having beaten the Zacks Consensus Estimate in two of the four trailing quarters and missing on two instances.
AptivAPTV holds a Zacks Rank of 2. Earnings for 2023 are expected to grow 37% while revenues are anticipated to gain 13.9% from the year-ago figure. APTV has an impressive earnings surprise of 13.35% in the past four quarters, having beaten the Zacks Consensus Estimate in all four trailing quarters.
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