NEW YORK (TheStreet) -- Shares of Green Dot (GDOT) were gaining 32.3% to $20.23 on heavy trading volume Tuesday after the credit services company announced a partnership extension with Walmart (WMT) and a new share repurchase program.
Green Dot announced that it entered into a new long-term agreement to continue serving as the program manager and issuing bank for the Walmart MoneyCard suite of prepaid reloadable credit card products.
The initial term of the new agreement is five years with an effective start date of May 1, 2015. The new agreement with Walmart replaces the two companies' previous agreement which was set to expire at the end of 2015.
The company also said its board of directors authorized the company to repurchase up to $150 million of its common stock, pending regulatory approval.
About 1.1 million shares of Green Dot were traded by 9:47 a.m. Tuesday, above the company's average trading volume of about 436,000 shares a day.
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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 9.4%. Since the same quarter one year prior, revenues rose by 42.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- GDOT's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.14, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for GREEN DOT CORP is currently very high, coming in at 74.80%. 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 17.96% trails the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength 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.
- GDOT has underperformed the S&P 500 Index, declining 21.80% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full analysis from the report here: GDOT Ratings Report