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Green Dot Gains on Growth Plans

Tickers in this article: AAPL BKS DG DLTR GDOT HD KR WMT

By Nate Matherson of Circa Alpha

NEW YORK (TheStreet) -- Shares of Green Dot ended trading Wednesday up nearly 16% at $23.28 after the company reported second-quarter earnings Tuesday.

For those of you who may not yet be familiar with the Green Dot brand, the company provides financial services and money management solutions to a large base of consumers.

Through its 60,000 retail store locations and Web site, Green Dot provides consumers convenient banking products and services that up until this point may not have been available to them. With all the technological advancement and expansions within the financial services industry, one may believe the number of underbanked or unbanked consumers is fairly low.

However, this number is far higher than many believe and offers great potential to companies like Green Dot looking to help solve this problem. In this article, I would like to review the company's recent quarterly performance and future growth potential in an effort to show you why I believe shareholders stand to do well over the longer term.

Second-Quarter Review

Green Dot reported a strong second quarter where the company beat analyst estimates on both the top and bottom lines. Revenue during the quarter rose 4.33% on a year over year basis to $142.6 million, beating analysts expectations of $135.53 million. On the bottom line the company posted an adjusted earnings per share of 33 cents, beating analyst estimates by 4 cents per share. The strong results were driven by strength throughout the company's revenues streams including purchase volume, gross dollar volume, and transfer volumes.

Let's break down some of the key metrics the Street was watching going into the quarter.

Purchase volume increased by $305 million to $3.2 billion, an increase of 10% over the second quarter of last year. Gross dollar volume came in at $4.4 billion, up by $445 million, or 11%. Cash transfers rose by 1.18 million, or 12%, to 11.32 million. While active card data may have come in flat, the company announced it's planning to increase the number of distribution points by 20,000 in the months ahead.