Green Dot shares get boost from strong 4Q results

Green Dot shares rise on better-than-expected 4th-quarter results

Associated Press

NEW YORK (AP) -- Shares of Green Dot Corp. rose Friday after prepaid debit card issuer posted a better-than-expected fourth-quarter profit.

THE SPARK: The Pasadena, Calif.-based company reported adjusted earnings of 31 cents per share, while analysts surveyed by FactSet expected a profit of 21 cents per share. Operating revenue increased 15 percent to $137.3 million, while analyst expected $123.2 million.

Green Dot also projected an adjusted 2013 profit of between 95 cents and $1.20 per share on operating revenue of between $510 million to $540 million. Analysts were forecasting earnings of $1.22 per share on $536.7 million in revenue.

THE BIG PICTURE: Green Dot credited the double-digit revenue growth to the strength of its brand at a time when consumers can pick from a large number of prepaid card and similar products.

The number of general purpose reloadable debit cards activated during the recent quarter fell 7 percent to 1.85 million. But excluding the company's discontinued TurboTax program in both periods, activations rose 6 percent.

In addition, the number of cash transfers rose 21 percent to 11 million.

The company's total number of activate cards rose 4 percent to 4.37 million as of the end of the quarter. Excluding Turbo Tax, the number of cards rose 6 percent.

THE ANALYSIS: Sterne Agee analyst Greg Smith backed his "Neutral" rating for Green Dot stock, calling the quarter's card usage numbers "encouraging." But he cut his 2013 earnings prediction by 13 cents to $1.21 per share and 2014 estimate by 6 cents to $1.31 per share, citing the company's "conservative" guidance.

Wedbush analyst Gil Luria also backed his "Neutral" rating, saying that while the company is a leader in its industry, its growth potential will continue to become less clear as competition increases.

THE SHARES: Green Dot shares rose 24 cents, or 2 percent, to $13.64 in midday trading, after peaking at $14.30 earlier in the day. Over the past 52 weeks, the shares have traded between $9.05 and $32.49.

Green Dot shares tumbled in July after the company reduced its outlook for 2012. But in the months since, the shares have risen about 48 percent.