Why Green Dot Shares Got the Green Light for Big Gains

Why Green Dot Shares Got the Green Light for Big Gains

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 Green Dot have risen nearly 14% today after the company surpassed analyst expectations in its second-quarter earnings report.

So what: Green Dot reported $142.6 million in revenues, a 4% year-over-year improvement, and $0.33 in earnings per share for the second quarter. Since Wall Street was looking for $135.1 million on the top line and $0.29 on the bottom line, these results were enough to send investors scurrying to scoop up more shares. Looking ahead, Green Dot now expects full-year results of between $565 million to $575 million in revenue and between $1.05 and $1.19 in EPS. The revenue range is better than the $556.8 million consensus, but Green Dot's EPS guidance barely bested Wall Street's projection of $1.19 for the full year.

Now what: Analysts at Compass Point boosted their price target from $23 per share (which is about where shares are currently trading) to $26 per share, representing a potential -- and respectable -- 14% upside. The company's P/E is hardly stratospheric at its current level, just below 22, but it isn't exactly roaring ahead, with full-year revenue guidance that only beats last year's result by 5% at the high end. Is Green Dot a buy? Maybe. Is it a screaming buy? Probably not.

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The article Why Green Dot Shares Got the Green Light for Big Gains originally appeared on Fool.com.

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