Green Dot Corp. operates as a financial technology leader and bank holding company, which engages in the provision of prepaid cards, debit cards, checking accounts, secured credit cards, payroll debit cards, consumer cash processing services, wage disbursements, and tax refund processing services. It operates through the following segments: Account Services; and Processing and Settlement Services. The Account Services segment offers deposit account programs that can be acquired through omni-channel distribution platform. The Processing and Settlement Services segment comprises of products and services that specialize in facilitating the movement of funds on behalf of consumers and businesses. The company was founded by Steven W. Streit in October 1, 1999 and is headquartered in Pasadena, CA.
GDOT Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Green Dot Corp with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Green Dot Corp ranked in the 39th percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 30.67%. The most interesting components of our discounted cash flow analysis for Green Dot Corp ended up being:
The company's debt burden, as measured by earnings divided by interest payments, is 241.88; that's higher than 96.4% of US stocks in the Financial Services sector that have positive free cash flow.
The business' balance sheet suggests that 4% of the company's capital is sourced from debt; this is greater than just 13.49% of the free cash flow producing stocks we're observing.
GDOT's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 46.48% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
ASPS, GBL, L, NDAQ, and MSCI can be thought of as valuation peers to GDOT, in the sense that they are in the Financial Services sector and have a similar price forecast based on DCF valuation.
Green Dot Corporation (NYSE: GDOT) will host a conference call and earnings webcast to discuss second quarter 2020 financial results on Tuesday, August 4, 2020 at 5:00pm ET. A press release with second quarter 2020 financial results will be issued after the market closes that same day. The live webcast of the call can be accessed from Green Dot’s investor relations website at http://ir.greendot.com/. A replay will be available at the same website following the call.
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After falling 71% in 2019 amid disappointing financial results, shares of financial services firm Green Dot (NYSE: GDOT) have more than doubled so far in 2020. Green Dot is not the extreme value it was six months ago, but this fintech outfit might have a little gas left in the tank -- although it isn't likely to be a high-growth name like some of its peers. Green Dot is known for its prepaid debit cards, online bank portal, and cash transfer platform.