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Why Is Green Dot (GDOT) Down 7.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Green Dot (GDOT). Shares have lost about 7.2% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Green Dot Q1 Earnings Lag Estimates, Revenues Beat

Green Dotreported mixed first-quarter 2021 results, with earnings missing the Zacks Consensus Estimate but revenues beating the same.

Quarterly adjusted earnings of 83 cents per share missed the consensus estimate by 10.8% and declined 26.5% on a year-over-year basis. Non-GAAP operating revenues of $379.8 million surpassed the consensus mark by 6.7% and increased 10% year over year.

Segmental Revenues

The Consumer Services segment’s revenues came in at $184.3 million, up 20.5% from the year-ago quarter’s level. The Business to Business Services segment’s revenues of $106 million increased 43.5% year over year. Money Movement Services segment’s revenues declined 24.7% year over year to $90.5 million.

Key Metrics

Gross dollar volume climbed 44.6% year over year to $20.7 billion. Purchase volume rose 26.1% from the prior-year quarter’s level to $10.4 billion. The company ended the quarter with 6.4 million active accounts, up 10.6% year over year.

Operating Results

Adjusted EBITDA of $73.4 million declined 20.4% on a year-over-year basis. Adjusted EBITDA margin of 19.3% was down from the year-ago quarter’s level of 26.6%.

Balance Sheet

Green Dot exited the quarter with cash, cash equivalents balance of $2.7 billion compared with $1.5 billion witnessed at the end of the prior quarter. The company had no long-term debt. Green Dot generated $80.7 million of cash from operating activities and capex was $10.5   million.  

2021 Guidance

Green Dot raised its 2021 revenue guidance. It now expects 2021 non-GAAP total operating revenues in the range of $1.27 to $ 1.29 billion, compared with the previous guidance of $1.23-$1.25 billion. The company continues to expect non-GAAP EPS in the range of $2.06 and $2.15, the midpoint ($2.1) of which is higher than the current consensus estimate of $2.09.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -32.12% due to these changes.

VGM Scores

At this time, Green Dot has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Green Dot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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