Green Dot Corporation (NYSE:GDOT) shareholders are probably feeling a little disappointed, since its shares fell 2.1% to US$44.79 in the week after its latest quarterly results. Sales of US$380m surpassed estimates by 4.9%, although statutory earnings per share missed badly, coming in 26% below expectations at US$0.46 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following last week's earnings report, Green Dot's nine analysts are forecasting 2021 revenues to be US$1.27b, approximately in line with the last 12 months. Statutory earnings per share are predicted to bounce 2,852% to US$0.94. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.25b and earnings per share (EPS) of US$0.92 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$58.45, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Green Dot at US$72.00 per share, while the most bearish prices it at US$45.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 1.6% by the end of 2021. This indicates a significant reduction from annual growth of 13% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.9% per year. It's pretty clear that Green Dot's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Green Dot's revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$58.45, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Green Dot analysts - going out to 2023, and you can see them free on our platform here.
Even so, be aware that Green Dot is showing 3 warning signs in our investment analysis , you should know about...
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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