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Green Dot Corporation (GDOT) Q3 Earnings Preview: Tricking Or Treating Shareholders On Halloween?

 October 29, 2013 02:35 PM


Green Dot Corporation (GDOT) will host a conference call to discuss third quarter 2013 financial results on Thursday, October 31, 2013 at 4:30pm ET. A press release with third quarter 2013 financial results will be issued after the market closes that same day.

Wall Street anticipates that the Business Services provider will make a profit of $0.21 per share for the quarter. iStock expects GDOT to top Wall Street's consensus number. The iEstimate is $0.22, too.

Green Dot operates as a technology-centric, pro-consumer bank holding company that provides personal banking for the masses. It offers prepaid debit card products and prepaid card reloading services in the United States, as well as mobile banking services with its GoBank mobile bank account offering.

[Related -Green Dot Corporation (GDOT) Q2 Earnings Preview: Costs Could Hurt Quarter]

It will be fascinating to see how Green Dot fares considering dueling research opinions. On October 19th, Janney Capital downgraded Green Dot to a "Sell" from "Neutral" rating. The firm says increased competition, specifically from American Express (AXP), and new entrants will make life more difficult for the business pre-paid card company. Janney believes GDOT is a $15 stock.

On the other hand, Piper Jaffray says nope, Green Dot's price target is $26. Earlier today, the research firm upgraded the stock to an "Overweight" from "Neutral" rating. Jaffray believes the recent price-pullback and concerns over competition are overdone.

They both can't be right – can they?

[Related -Stocks End Flat Amid Fed Uncertainty; Green Dot Corporation (GDOT) Jumps]

Green Dot has surpassed investors' expectation for the last four quarters; however, the magnitude of bullish surprises is trending downwards for the last three quarters.  Prior to its recent string of success, GDOT missed the mark, usually by a wide margin, eight consecutive quarters.

In the last four quarters, earnings drove the stock higher an average of 11.65% with a tight range of 9% to 13.4%. Prior to its recent run, shareholders weren't so lucky as the stock lost an average of 9.49% in the three days surrounding the previous eight quarterly checkups.

Being on the right side of the trade can be rewarding as you can see. Rather than flipping a coin to pick which research firm to go with, let's turn to Google Trends to see if search volume intensity is up or down for the keyword "Green Dot."

And web queries say… Piper Jaffray is the early favorite to be the winner. Year-over-year (YoY) search volume intensity increased 8.53% and 3.58% quarter-over-quarter (QoQ).  Last year GDOT earned $0.29 in Q3 and $0.33 last quarter (Q2 2013). If Google Trends translate, Green Dot will earn a lot more than the current $0.21 consensus.

Overall: Minus Piper Jaffray, sentiment for Green Dot Corporation (GDOT) is sour heading into their Thursday EPS announcement. Google Trends suggest YoY and QoQ improvement. If that's the case, history suggests GDOT will treat investors on Halloween.

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