Why Green Dot Shares Went Bright Green

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of prepaid debit card company Green Dot soared 17% today after its quarterly results and outlook topped Wall Street expectations.

So what: The stock had plunged over the past month on concerns over rising competition, but today's third-quarter results -- adjusted earnings per share of $0.24 beat Wall Street by $0.06 on revenue growth of 4% -- coupled with upbeat guidance are quickly easing those worries. In fact, management cited several initiatives for the strong report, including a large product expansion at Wal-Mart stores and added retail distribution locations, giving analysts a much better feeling over Green Dot's market share going forward.

Now what: Management now sees full-year adjusted EPS of $1.10-$1.20 on revenue of $575 million-$580 million, up from its prior view of $1.05-$1.20 and $565 million-$575 million. "Green Dot continues to be both the largest company in the prepaid industry, and the hands-down leader in attracting, sticky, reloading customers," CEO Steve Streit said. "We feel very good about the future prospects for our company and believe we are well-positioned to return to double digit revenue growth as we look toward 2014." Of course, with the stock now up 160% over its 52-week lows and trading at two times book value, I'd wait for a wider margin of safety in case the future isn't quite as bright as Green Dot believes.

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The article Why Green Dot Shares Went Bright Green originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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