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Green Dot (GDOT) Showing Signs Of Perilous Reversal Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Green Dot ( GDOT) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Green Dot as such a stock due to the following factors:

  • GDOT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.3 million.
  • GDOT has traded 514,461 shares today.
  • GDOT is down 3.1% today.
  • GDOT was up 9.3% yesterday.

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More details on GDOT:

Green Dot Corporation, together with its subsidiaries, operates as a technology-centric, pro-consumer bank holding company that provides personal banking for the masses. GDOT has a PE ratio of 23.8. Currently there are 2 analysts that rate Green Dot a buy, 1 analyst rates it a sell, and 10 rate it a hold.

The average volume for Green Dot has been 306,700 shares per day over the past 30 days. Green Dot has a market cap of $826.0 million and is part of the services sector and diversified services industry. The stock has a beta of 1.03 and a short float of 8.5% with 2.14 days to cover. Shares are up 106.9% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Green Dot as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • GDOT's revenue growth has slightly outpaced the industry average of 2.1%. Since the same quarter one year prior, revenues slightly increased by 4.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • GDOT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.48, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 224.73% to $62.62 million when compared to the same quarter last year. In addition, GREEN DOT CORP has also vastly surpassed the industry average cash flow growth rate of -99.93%.
  • The gross profit margin for GREEN DOT CORP is rather high; currently it is at 68.35%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.04% trails the industry average.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 109.28% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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