Green Dot (GDOT) Weak On High Volume

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 $11.7 million.
  • GDOT has traded 358,685 shares today.
  • GDOT is trading at 24.75 times the normal volume for the stock at this time of day.
  • GDOT is trading at a new low 6.01% 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 4. Currently there are 4 analysts that rate Green Dot a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Green Dot has been 489,000 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 6.6% with 5.38 days to cover. Shares are up 36.8% year-to-date as of the close of trading on Monday.

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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, expanding profit margins, solid stock price performance and attractive valuation levels. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 3.6%. Since the same quarter one year prior, revenues slightly increased by 0.4%. 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 0.17 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 1.09, 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 76.13%. 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 14.42% trails the industry average.
  • Compared to its closing price of one year ago, GDOT's share price has jumped by 50.67%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • GREEN DOT CORP's earnings per share declined by 17.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing 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 ($1.40 versus $0.70).

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