Weak On High Volume: Green Dot (GDOT)

Trade-Ideas LLC identified Green Dot ( GDOT) as a weak on high relative volume 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 $10.8 million.
  • GDOT has traded 245,290 shares today.
  • GDOT is trading at 4.54 times the normal volume for the stock at this time of day.
  • GDOT is trading at a new low 3.04% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on GDOT:

Green Dot Corporation, together with its subsidiaries, operates as a pro-consumer technology bank holding company that provides personal banking for the masses. GDOT has a PE ratio of 31. Currently there are 4 analysts that rate Green Dot a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Green Dot has been 515,400 shares per day over the past 30 days. Green Dot has a market cap of $1.1 billion and is part of the financial sector and financial services industry. The stock has a beta of 0.75 and a short float of 8.5% with 8.32 days to cover. Shares are up 38.4% 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 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, solid stock price performance and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • GDOT's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 0.2%. 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's debt-to-equity ratio is very low at 0.18 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 1.06, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 93.98% to $42.97 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 1.65%.
  • Compared to its closing price of one year ago, GDOT's share price has jumped by 37.02%, exceeding the performance of the broader market during that same time frame. 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.
  • GREEN DOT CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, GREEN DOT CORP reported lower earnings of $0.70 versus $0.94 in the prior year. This year, the market expects an improvement in earnings ($1.38 versus $0.70).

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