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Here's Why You Should Hold on to Green Dot (GDOT) Stock for Now

Green Dot Corporation GDOT has an impressive Growth Score of B. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of the quality and sustainability of its growth.

The company’s earnings for 2022 and 2023 are expected to grow at a rate of 10.4% and 10.5%, respectively, on a year-over-year basis.

Factors That Augur Well

Green Dot remains focused on ensuring the long-term growth of its businesses. The company’s efforts are toward the acquisition of long-term users of its products, improving brands and image, building market adoption and awareness of products, and increasing card usage and customer retention. Its sales and marketing efforts remain focused on a broad group, ranging from never-banked to fully-banked consumers.

Green Dot’s long-standing relationship with Walmart remains a key driver of its operating revenues. The company’s operating revenues derived from products and services offered through Walmart represented 24%, 27% and 34% of total operating revenues for 2021, 2020 and 2019, respectively.

Green Dot Corporation Revenue (TTM)

Green Dot Corporation Revenue (TTM)
Green Dot Corporation Revenue (TTM)

Green Dot Corporation revenue-ttm | Green Dot Corporation Quote

Green Dot is expanding its addressable market with the help of its banking-as-a-service (BaaS) account programs. The company partners with some top consumer and technology companies, including Amazon and Apple, to design and develop their fintech banking solutions through its BaaS platform. These solutions are then made available by these companies to their consumers and partners again through integration with the BaaS program, eventually expanding Green Dot’s spectrum of consumers.

Some Risks

Green Dot's current ratio at the end of the March quarter was pegged at 0.49, lower than the current ratio of 0.50 reported at the end of the December quarter and the prior-year quarter’s 0.82. Decreasing the current ratio is not desirable, as it indicates that the company may have problems meeting its short-term debt obligations.

Green Dot's shares have lost 45% over the past year compared with a 32.3% loss in the industry it belongs to.

Zacks Rank and Stocks to Consider

Green Dot currently carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks from the broader Zacks Business Services sector are Avis Budget Group, Inc. CAR and Automatic Data Processing, Inc. ADP.

Avis Budget sports a Zacks Rank #1 (Strong Buy) at present. CAR has a full-year earnings expectation of 108.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Avis Budget delivered a trailing four-quarter earnings surprise of 69.5%, on average.

Automatic Data Processinghas a Zacks Rank #2 (Buy) at present. ADP has a long-term earnings growth expectation of 12%.

Automatic Data Processing delivered a trailing four-quarter earnings surprise of 5%, on average.

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