A month has gone by since the last earnings report for Green Dot (GDOT). Shares have added about 3.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Green Dot due for a pullback? 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 Beats on Q3 Earnings
Green Dot Corporation delivered strong third-quarter 2022 results, wherein both earnings and revenues beat the respective Zacks Consensus Estimate.
Quarterly non-GAAP earnings of 44 cents per share beat the consensus estimate by 22.2% and increased 2.3% on a year-over-year basis. Non-GAAP operating revenues of $337.2 million beat the consensus mark by 3.3% but decreased slightly year over year.
Segmental Revenues
The Consumer Services segment’s revenues came in at $135.8 million, down 18.9% from the year-ago quarter’s level. The B2B Services segment’s revenues of $158.2 million increased 33.9% year over year. Money Movement Services segment’s revenues were down 21.6% year over year to $14.7 million.
Key Metrics
Gross dollar volume increased 13.9%year over year to $18.7 billion. Purchase volume fell 12.4% from the prior-year quarter’s level to $6.4 billion. GDOT ended the quarter with 4.61 million active accounts, down 19.4% year over year.
Operating Results
Adjusted EBITDA of $45.5 million decreased 2% on a year-over-year basis. Adjusted EBITDA margin of 13.5% was down from the year-ago quarter’s level of 14.1%.
Balance Sheet
Green Dot exited the quarter with unrestricted cash and cash equivalents balance of $813.2 million compared with $776.3 million reported at the end of the prior quarter. GDOT had no long-term debt. GDOT generated $64.6 million in cash from operating activities in the quarter.
2022 Guidance
GDOT has raised its 2022 non-GAAP EPS guidance. The company now expects EPS to be in the range of $2.42-$2.51 compared with the previous expectation of $2.35-$2.49.
GDOT continues to expect full-year non-GAAP total operating revenues to be between $1.394 billion and $1.43 billion.
The company narrowed its range for adjusted EBITDA to $232-$238 million from the previously guided range of $230-$240 million while keeping the midpoint reaffirmed.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -81.48% due to these changes.
VGM Scores
Currently, Green Dot has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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.
Performance of an Industry Player
Green Dot is part of the Zacks Financial Transaction Services industry. Over the past month, Envestnet (ENV), a stock from the same industry, has gained 17.5%. The company reported its results for the quarter ended September 2022 more than a month ago.
Envestnet reported revenues of $306.7 million in the last reported quarter, representing a year-over-year change of +1.2%. EPS of $0.45 for the same period compares with $0.61 a year ago.
Envestnet is expected to post earnings of $0.44 per share for the current quarter, representing a year-over-year change of -12%. Over the last 30 days, the Zacks Consensus Estimate has changed -9.7%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Envestnet. Also, the stock has a VGM Score of C.
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