NEW YORK (TheStreet) -- Shares of Green Dot Corp. (GDOT) are higher by 3.30% to $19.57 in mid-afternoon trading on Thursday, after the company announced its plan to acquire the privately held Santa Barbara Tax Products Group for approximately $320 million in cash and stock.
Green Dot, a bank holding company, said it believes Santa Barbara Tax Products Group, a company that offers tax-related financial products, is "a great acquisition," as it will "generate mid-teens percentage accretion to 2015 non-GAAP earnings per share."
"The transaction is expected to expand Green Dot's margins thereby enabling Green Dot to generate higher and more diversified earnings," company CEO Steve Streit said.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Additionally, as a result of this new acquisition, Green Dot lowered its 2014 full year financial outlook, and is now expecting adjusted EBITDA to be between $122 million and $126 million, from its previous guidance of $128 million to $132 million.
Non-GAAP diluted earnings per share are now forecast to be between $1.25 per share and $1.29 per share for the full year, compared to the company's original estimates of EPS between $1.37 and $1.41.
Revenues are expected between $610 million and $620 for fiscal 2015. Green Dot originally guided for revenue between $640 million and $650 million.
Separately, TheStreet Ratings team rates GREEN DOT CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate GREEN DOT CORP (GDOT) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GDOT's revenue growth has slightly outpaced the industry average of 0.1%. Since the same quarter one year prior, revenues slightly increased by 4.5%. 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 1.39, which illustrates the ability to avoid short-term cash problems.
- GREEN DOT CORP has improved earnings per share by 24.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GREEN DOT CORP reported lower earnings of $0.77 versus $1.03 in the prior year. This year, the market expects an improvement in earnings ($1.41 versus $0.77).
- 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.
- Net operating cash flow has significantly decreased to $24.68 million or 60.58% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: GDOT Ratings Report