On Jan 14, Zacks Investment Research upgraded Green Dot Corp. (GDOT) by two notches to a Zacks Rank #1 (Strong Buy) from a Zacks Rank #3 (Hold).
Why the Upgrade?
Ahead of its fourth-quarter earnings slated to release on Jan 29, Green Dot is riding on a strong growth momentum on the back of improved outlook for 2014 and beyond. The momentum is also fueled by the company’s sturdy and debt-free balance sheet along with solid core growth opportunities.
Meanwhile, Green Dot has been focusing on its inorganic growth initiatives. In this regard, the acquisition of Santa Barbara Tax Products in Oct 2014 as well as strategic alliances with Walgreens, Walmart and ACE Cash Express are expected to drive growth and help maintain the company’s leading market position.
Additionally, this largest prepaid debit card provider has delivered positive earnings surprises in the three of the four quarters, with an average beat of 5.8%. The third-quarter 2014 earnings of 36 cents per share topped both the Zacks Consensus Estimate and the year-ago quarter figure by 50%, reflecting strong trends going ahead.
Upward estimate revisions witnessed by Green Dotalso reflect optimism. The Zacks Consensus Estimate for 2015 grew 1.4% to $1.50 a share, while the same for 2014 remained intact at $1.13, in the last 60 days. Notably, earnings are expected to surge about 40% on a year-over-year basis in 2014 and 32.2% in 2015, while no downward estimate revisions were witnessed for both the years.
Moreover, the Most Accurate estimate for Green Dot’s 2015 earnings currently stand at $1.55 a share, resulting in an Earnings ESP of +3.3%. With no downward estimate revision, this indicates likely earnings beat for the year.
Despite competitive pressure and higher expenses, Green Dot has been able to achieve strong growth in bottom line and purchase volumes by aggressively focusing on continued mix shift in the total active card portfolio towards higher margin products. Additionally, the company has been accentuating its efficiencies in operating infrastructure that steer clear of major market risks. These factors have scored well with investors and ratings agencies, thereby raising the outlook for coming quarters as well.
Other Stocks to Consider
Investors interested in the insurance industry may also consider other favorably-ranked stocks like General Finance Corp. (GFN), FleetCor Technologies Inc. (FLT) and Ladder Capital Corp. (LADR), each sporting the same Zacks Rank as Green Dot.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment