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Imagine Owning Green Dot (NYSE:GDOT) While The Price Tanked 58%

Simply Wall St

Green Dot Corporation (NYSE:GDOT) shareholders should be happy to see the share price up 18% in the last week. But that doesn't change the fact that the returns over the last year have been disappointing. During that time the share price has sank like a stone, descending 58%. It's not that amazing to see a bounce after a drop like that. It may be that the fall was an overreaction.

Check out our latest analysis for Green Dot

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Unhappily, Green Dot had to report a 16% decline in EPS over the last year. This reduction in EPS is not as bad as the 58% share price fall. So it seems the market was too confident about the business, a year ago.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

NYSE:GDOT Past and Future Earnings April 9th 2020
NYSE:GDOT Past and Future Earnings April 9th 2020

It is of course excellent to see how Green Dot has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

We regret to report that Green Dot shareholders are down 58% for the year. Unfortunately, that's worse than the broader market decline of 6.0%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 8.8%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with Green Dot (including 1 which is doesn't sit too well with us) .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.