Perilous Reversal 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 "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 $18.2 million.
  • GDOT has traded 122,491 shares today.
  • GDOT is down 3.2% today.
  • GDOT was up 24.4% 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, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Green Dot has been 273,700 shares per day over the past 30 days. Green Dot has a market cap of $755.0 million and is part of the financial sector and financial services industry. The stock has a beta of 1.12 and a short float of 8.7% with 3.81 days to cover. Shares are down 6.9% year-to-date as of the close of trading on Wednesday.

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 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 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 ratings report include:
  • 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.

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

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