Why Is Green Dot (GDOT) Down 44.9% Since Last Earnings Report?

A month has gone by since the last earnings report for Green Dot (GDOT). Shares have lost about 44.9% 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 drivers.

Green Dot Beats Q4 Earnings Estimates

Green Dotreported mixed fourth-quarter 2019 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.

Adjusted earnings of 14 cents beat the Zacks Consensus Estimate by 27.3% but declined 75% year over year. However, quarterly revenues of $238.4 million missed the consensus mark by 9 cents but slightly improved year over year. The uptick reflected strength ininterchange revenues, and processing and settlement segment.

Q4 Financials

The Account Services segment’s non-GAAP operating revenues came in at $189.6 million, down 6.3% from the year-ago quarter due to decrease in active accounts (2.7% sequentially) from the company’s consumer business. The Processing and Settlement Services segment’s non-GAAP operating revenues of $55.5 million grew 32.8% from the year-ago quarter, driven by increased transaction volumes across product lines.

Key Metrics

Gross dollar volume grew 8.4 % year over year to $10.6 billion. Purchase volume also increased 0.2% from the prior-year quarter to $6.3 billion. The company ended the quarter with 5.04 million active accounts (down 5.6%) and 12.08 million cash transfers (up 10.7% year over year). The number of tax refunds processed was 0.07 million, in line with the year-ago quarter.

Operating Results

Adjusted EBITDA of $21.8 million decreased 57.3% on a year-over-year basis. Adjusted EBITDA margin of 9.2% also decreased from 21.6% in the year-ago quarter.

Balance Sheet

Green Dot exited the quarter with cash, cash equivalents and restricted cash balance of $1.06 billion compared with $1.09 billion at the end of the prior quarter. The company had no long-term debt.

First-Quarter Guidance

Green Dot anticipates first-quarter 2020 non-GAAP revenues to be 30-31% and adjusted EBITDA to be48% of its full-year 2020 guidance at the midpoint.

2020 View

The company expects revenues in the range of $1.08-$1.1 billion. Adjusted earnings are expected in the range of $1.6-$1.74 per share. Green Dot anticipates full-year adjusted EBITDA between $175 million and $185 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted 7.92% due to these changes.

VGM Scores

At this time, Green Dot has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. 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.