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Why Is Green Dot (GDOT) Down 17% Since Last Earnings Report?

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Shares of Green Dot Corporation GDOT have declined 17% since its third-quarter 2019 earnings release on Nov 7, against 0.3% rise of the industry it belongs to.

The price decline can be attributed mainly to disappointing 2019 guidance. Although the company 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.

Let’s see the quarterly numbers in detail

Earnings and Revenues

Non-GAAP EPS of 20 cents beat the consensus mark of 2 cents but decreased 66.1 % year over year. Non-GAAP operating revenues of $229.2 million beat the consensus mark by 0.4%. Revenues reflected strength in the processing and settlement segment.

Green Dot Corporation Price, Consensus and EPS Surprise

 

Green Dot Corporation Price, Consensus and EPS Surprise
Green Dot Corporation Price, Consensus and EPS Surprise

Green Dot Corporation price-consensus-eps-surprise-chart | Green Dot Corporation Quote

 

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.

Key Metrics

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.

Operating Results

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.

Zacks Rank & Other Stocks to Consider

Green Dot currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few other top-ranked stocks in the broader Zacks Business Services sector are Global Payments GPN, Mastercard MA and Cardtronics CATM. While Global Payments sports a Zacks Rank #1, Mastercard and Cardtronics carry a Zacks Rank #2.

Long-term expected EPS (three to five years) growth rate for Global Payments, Mastercard and Cardtronics is 17%, 16% and 4%, respectively.

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Cardtronics PLC (CATM) : Free Stock Analysis Report
 
Green Dot Corporation (GDOT) : Free Stock Analysis Report
 
Global Payments Inc. (GPN) : Free Stock Analysis Report
 
Mastercard Incorporated (MA) : Free Stock Analysis Report
 
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