Green
Dot Corporation (GDOT, $66.68): “The Growing Green Machine”
By:
Matthew Vieth, AIM Student at Marquette University
Disclosure:
The AIM Equity Fund currently holds this position. This article was written by
myself, and it expresses my own opinions. I am not receiving compensation for
it and I have no business relationship with any company whose stock is
mentioned in this article.
Summary
• Green Dot Corporation (NYSE:GDOT) operates as a financial
technology leader and bank holding company. It engages in the provision of
prepaid cards, debit cards, checking accounts, secured credit cards, payroll
debit cards, etc.
• Continued growth and
expected future revenue growth of 13% in 2019.
• Strong client
relationships with major market leaders which boost operating revenue and
continue to grow year over year.
• Low price relative to
anticipated future growth creates an excellent opportunity for gains to
investors.
Key
points:
Green Dot Corporation over the past year has produced
strong returns and continues to show strong growth potential for investors.
This performance has come from its strategic plan which emphasizes customer
satisfaction and branding itself as a bank different from the rest. This has
led to strong sales growth which is expected to increase by 13% in 2019 with
earnings per share anticipated to be $3.60, representing roughly a 61% growth
from 2018. Further, GDOT’s price is undervalued for the level of output and growth
it continues to achieve.
Aside from its strong
customer service, Green Dot Corporation’s strong growth also comes from its
Banking as a Service (BaaS) platform. This platform contributes heavily to
GDOT’s active card total and revenue as it continues to add new clients to the
platform. One of these major clients is Walmart which has contributed over 40%
of GDOT’s total operating revenues in 2015, 2016, and 2017. This relationship
as well as other continue to provide excellent sources of revenue for GDOT that
continue to grow in size year over year leading to excellent opportunities for
GDOT going forward.
What
has the stock done lately?
Over the past month,
GDOT’s stock price has increased roughly 8% in part from its continued
partnerships with Walmart and other, plus its excellence in customer service.
This growth comes after a price decline of 20% during February which makes the
stock an attractive buy opportunity for investors.
Past
Year Performance:
Over the past year, GDOT
has grown roughly 8% from $62 to $66.68. The stock had more volatility than
normal thanks in part to the market correction in late 2018 and an analyst
target price decrease that hurt the stock in late February but rebounded into
positive gain territory. The strong growth rate of GDOT and its client
relationships have helped shaped this business over the past year and will reap
further benefits from this over time.
Source:
FactSet
My
Takeaway:
With an emphasis in
customer service and strong growth with impressive revenue history, Green Dot
Corporation has positioned itself well among other competitors. The banking
industry is being disrupted by technology and customer expectations are
increasing, meaning only the most adaptive businesses in the banking industry
can survive. This is what makes GDOT such an attractable opportunity because of
its ability to adapt and meet customer needs while also growing sales.
Source:
FactSet
