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Today's Dead Cat Bounce Stock: Green Dot (GDOT)

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 "dead cat bounce" (down big yesterday but up 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 $22.8 million.
  • GDOT has traded 496,354 shares today.
  • GDOT is up 3.3% today.
  • GDOT was down 8.2% 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 4 analysts that rate Green Dot a buy, 2 analysts rate it a sell, and 7 rate it a hold.

The average volume for Green Dot has been 527,000 shares per day over the past 30 days. Green Dot has a market cap of $863.7 million and is part of the services sector and diversified services industry. The stock has a beta of 1.06 and a short float of 16.9% with 4.53 days to cover. Shares are down 15.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Green Dot as a hold. 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 and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • GDOT's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues slightly increased by 3.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in 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 1.42, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 51.51% to $28.35 million when compared to the same quarter last year. Despite an increase in cash flow, GREEN DOT CORP's cash flow growth rate is still lower than the industry average growth rate of 100.22%.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Consumer Finance industry. The net income has significantly decreased by 90.0% when compared to the same quarter one year ago, falling from $10.37 million to $1.04 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Consumer Finance industry and the overall market, GREEN DOT CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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