Why Green Dot Shares Went Bright Green
Nov 1st 2013 2:23PM
Updated Nov 1st 2013 2:24PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of prepaid debit card company Green Dot soared 17% today after its quarterly results and outlook topped Wall Street expectations.
So what: The stock had plunged over the past month on concerns over rising competition, but today's third-quarter results -- adjusted earnings per share of $0.24 beat Wall Street by $0.06 on revenue growth of 4% -- coupled with upbeat guidance are quickly easing those worries. In fact, management cited several initiatives for the strong report, including a large product expansion at Wal-Mart stores and added retail distribution locations, giving analysts a much better feeling over Green Dot's market share going forward.
Now what: Management now sees full-year adjusted EPS of $1.10-$1.20 on revenue of $575 million-$580 million, up from its prior view of $1.05-$1.20 and $565 million-$575 million. "Green Dot continues to be both the largest company in the prepaid industry, and the hands-down leader in attracting, sticky, reloading customers," CEO Steve Streit said. "We feel very good about the future prospects for our company and believe we are well-positioned to return to double digit revenue growth as we look toward 2014." Of course, with the stock now up 160% over its 52-week lows and trading at two times book value, I'd wait for a wider margin of safety in case the future isn't quite as bright as Green Dot believes.
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