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Strength Seen in Green Dot (GDOT): Can Its 7.3% Jump Turn into More Strength?

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Green Dot (GDOT) shares ended the last trading session 7.3% higher at $26.42. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 15.8% loss over the past four weeks.

Green Dot extended its rally for the fifth straight day, driven by optimism over the ongoing recovery in the financial transaction space. The streak follows a massive industry-wide panic selling, which made financial transaction services stocks attractive again. Also, the prepaid credit card market is expected to witness tremendous growth this year, which might be intriguing the investors. GDOT's focus on expanding its addressable market with the help of its banking-as-a-service (BaaS) account programs is a major positive.

This bank holding company is expected to post quarterly earnings of $0.56 per share in its upcoming report, which represents a year-over-year change of -17.7%. Revenues are expected to be $358.77 million, up 0.2% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Green Dot, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on GDOT going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Green Dot belongs to the Zacks Financial Transaction Services industry. Another stock from the same industry, Usio Inc (USIO), closed the last trading session 1.7% lower at $2.37. Over the past month, USIO has returned 0.8%.

For Usio Inc , the consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.05. This represents a change of -600% from what the company reported a year ago. Usio Inc currently has a Zacks Rank of #4 (Sell).

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