Intrinsic value of Green Dot Corporation - GDOT

Previous Close

$49.00

  Intrinsic Value

$75.58

stock screener

  Rating & Target

str. buy

+54%

Previous close

$49.00

 
Intrinsic value

$75.58

 
Up/down potential

+54%

 
Rating

str. buy

Our model is not good at valuating stocks of financial companies, such as GDOT.

We calculate the intrinsic value of GDOT stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  11.70
  11.03
  10.43
  9.88
  9.40
  8.96
  8.56
  8.20
  7.88
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
Revenue, $m
  1,164
  1,292
  1,427
  1,568
  1,715
  1,869
  2,029
  2,196
  2,369
  2,549
  2,736
  2,930
  3,132
  3,342
  3,560
  3,787
  4,023
  4,270
  4,526
  4,793
  5,072
  5,363
  5,666
  5,983
  6,314
  6,660
  7,022
  7,401
  7,797
  8,211
Variable operating expenses, $m
  1,029
  1,137
  1,250
  1,368
  1,491
  1,620
  1,754
  1,893
  2,038
  2,189
  2,290
  2,453
  2,622
  2,797
  2,980
  3,170
  3,368
  3,574
  3,789
  4,013
  4,246
  4,489
  4,743
  5,009
  5,286
  5,576
  5,879
  6,195
  6,527
  6,874
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,029
  1,137
  1,250
  1,368
  1,491
  1,620
  1,754
  1,893
  2,038
  2,189
  2,290
  2,453
  2,622
  2,797
  2,980
  3,170
  3,368
  3,574
  3,789
  4,013
  4,246
  4,489
  4,743
  5,009
  5,286
  5,576
  5,879
  6,195
  6,527
  6,874
Operating income, $m
  134
  155
  177
  200
  224
  249
  275
  303
  331
  360
  446
  477
  510
  544
  580
  617
  655
  695
  737
  781
  826
  873
  923
  975
  1,028
  1,085
  1,144
  1,205
  1,270
  1,337
EBITDA, $m
  236
  262
  289
  317
  347
  378
  411
  445
  480
  516
  554
  593
  634
  677
  721
  767
  815
  864
  916
  970
  1,027
  1,086
  1,147
  1,211
  1,278
  1,348
  1,422
  1,498
  1,579
  1,662
Interest expense (income), $m
  8
  6
  20
  36
  52
  69
  87
  106
  125
  146
  167
  188
  211
  235
  259
  285
  311
  339
  368
  397
  429
  461
  495
  530
  567
  606
  646
  688
  732
  778
  826
Earnings before tax, $m
  129
  135
  142
  148
  155
  162
  170
  177
  185
  193
  257
  266
  275
  285
  295
  306
  317
  328
  340
  352
  365
  379
  393
  407
  423
  439
  456
  474
  492
  512
Tax expense, $m
  35
  36
  38
  40
  42
  44
  46
  48
  50
  52
  69
  72
  74
  77
  80
  83
  85
  89
  92
  95
  99
  102
  106
  110
  114
  119
  123
  128
  133
  138
Net income, $m
  94
  99
  103
  108
  113
  118
  124
  129
  135
  141
  188
  194
  201
  208
  215
  223
  231
  239
  248
  257
  267
  276
  287
  297
  309
  321
  333
  346
  359
  373

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,552
  2,834
  3,129
  3,439
  3,762
  4,099
  4,450
  4,815
  5,194
  5,589
  5,999
  6,425
  6,868
  7,328
  7,807
  8,305
  8,823
  9,363
  9,925
  10,512
  11,123
  11,760
  12,426
  13,121
  13,847
  14,606
  15,400
  16,230
  17,098
  18,007
Adjusted assets (=assets-cash), $m
  2,552
  2,834
  3,129
  3,439
  3,762
  4,099
  4,450
  4,815
  5,194
  5,589
  5,999
  6,425
  6,868
  7,328
  7,807
  8,305
  8,823
  9,363
  9,925
  10,512
  11,123
  11,760
  12,426
  13,121
  13,847
  14,606
  15,400
  16,230
  17,098
  18,007
Revenue / Adjusted assets
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
  0.456
Average production assets, $m
  438
  486
  537
  590
  645
  703
  763
  826
  891
  958
  1,029
  1,102
  1,178
  1,256
  1,339
  1,424
  1,513
  1,605
  1,702
  1,802
  1,907
  2,016
  2,131
  2,250
  2,374
  2,504
  2,640
  2,783
  2,932
  3,087
Working capital, $m
  -1,135
  -1,260
  -1,391
  -1,529
  -1,673
  -1,822
  -1,978
  -2,141
  -2,309
  -2,485
  -2,667
  -2,857
  -3,053
  -3,258
  -3,471
  -3,692
  -3,923
  -4,163
  -4,413
  -4,673
  -4,945
  -5,229
  -5,525
  -5,834
  -6,157
  -6,494
  -6,847
  -7,216
  -7,602
  -8,006
Total debt, $m
  220
  389
  567
  753
  948
  1,151
  1,362
  1,582
  1,810
  2,048
  2,294
  2,551
  2,818
  3,095
  3,383
  3,683
  3,995
  4,320
  4,658
  5,011
  5,379
  5,763
  6,164
  6,582
  7,019
  7,476
  7,954
  8,453
  8,976
  9,523
Total liabilities, $m
  1,537
  1,706
  1,884
  2,070
  2,265
  2,467
  2,679
  2,899
  3,127
  3,365
  3,611
  3,868
  4,134
  4,412
  4,700
  5,000
  5,312
  5,637
  5,975
  6,328
  6,696
  7,080
  7,480
  7,899
  8,336
  8,793
  9,271
  9,770
  10,293
  10,840
Total equity, $m
  1,016
  1,128
  1,246
  1,369
  1,497
  1,631
  1,771
  1,916
  2,067
  2,224
  2,388
  2,557
  2,733
  2,917
  3,107
  3,305
  3,512
  3,727
  3,950
  4,184
  4,427
  4,681
  4,946
  5,222
  5,511
  5,813
  6,129
  6,459
  6,805
  7,167
Total liabilities and equity, $m
  2,553
  2,834
  3,130
  3,439
  3,762
  4,098
  4,450
  4,815
  5,194
  5,589
  5,999
  6,425
  6,867
  7,329
  7,807
  8,305
  8,824
  9,364
  9,925
  10,512
  11,123
  11,761
  12,426
  13,121
  13,847
  14,606
  15,400
  16,229
  17,098
  18,007
Debt-to-equity ratio
  0.220
  0.350
  0.460
  0.550
  0.630
  0.710
  0.770
  0.830
  0.880
  0.920
  0.960
  1.000
  1.030
  1.060
  1.090
  1.110
  1.140
  1.160
  1.180
  1.200
  1.220
  1.230
  1.250
  1.260
  1.270
  1.290
  1.300
  1.310
  1.320
  1.330
Adjusted equity ratio
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  94
  99
  103
  108
  113
  118
  124
  129
  135
  141
  188
  194
  201
  208
  215
  223
  231
  239
  248
  257
  267
  276
  287
  297
  309
  321
  333
  346
  359
  373
Depreciation, amort., depletion, $m
  101
  106
  112
  117
  123
  129
  135
  142
  149
  156
  108
  116
  124
  132
  141
  150
  159
  169
  179
  190
  201
  212
  224
  237
  250
  264
  278
  293
  309
  325
Funds from operations, $m
  195
  205
  215
  225
  236
  247
  259
  271
  284
  297
  296
  310
  325
  340
  356
  373
  390
  408
  427
  447
  467
  489
  511
  534
  559
  584
  611
  639
  668
  698
Change in working capital, $m
  -119
  -125
  -131
  -138
  -144
  -150
  -156
  -162
  -169
  -175
  -182
  -189
  -197
  -205
  -213
  -221
  -230
  -240
  -250
  -261
  -272
  -284
  -296
  -309
  -323
  -337
  -353
  -369
  -386
  -404
Cash from operations, $m
  314
  330
  346
  363
  380
  397
  415
  434
  453
  473
  478
  500
  522
  545
  569
  594
  621
  648
  677
  707
  739
  772
  807
  843
  882
  922
  964
  1,008
  1,054
  1,103
Maintenance CAPEX, $m
  -41
  -46
  -51
  -56
  -62
  -68
  -74
  -80
  -87
  -94
  -101
  -108
  -116
  -124
  -132
  -141
  -150
  -159
  -169
  -179
  -190
  -201
  -212
  -224
  -237
  -250
  -264
  -278
  -293
  -309
New CAPEX, $m
  -45
  -48
  -51
  -53
  -55
  -58
  -60
  -63
  -65
  -68
  -70
  -73
  -76
  -79
  -82
  -85
  -89
  -93
  -96
  -100
  -105
  -109
  -114
  -119
  -125
  -130
  -136
  -142
  -149
  -156
Cash from investing activities, $m
  -86
  -94
  -102
  -109
  -117
  -126
  -134
  -143
  -152
  -162
  -171
  -181
  -192
  -203
  -214
  -226
  -239
  -252
  -265
  -279
  -295
  -310
  -326
  -343
  -362
  -380
  -400
  -420
  -442
  -465
Free cash flow, $m
  227
  236
  244
  253
  262
  272
  281
  291
  301
  311
  307
  318
  330
  342
  355
  368
  382
  397
  412
  428
  445
  462
  481
  500
  520
  542
  564
  587
  612
  638
Issuance/(repayment) of debt, $m
  159
  169
  178
  186
  195
  203
  211
  220
  229
  238
  247
  256
  267
  277
  288
  300
  312
  325
  339
  353
  368
  384
  401
  418
  437
  457
  478
  500
  523
  547
Issuance/(repurchase) of shares, $m
  12
  13
  14
  15
  15
  16
  16
  16
  16
  16
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  171
  182
  192
  201
  210
  219
  227
  236
  245
  254
  247
  256
  267
  277
  288
  300
  312
  325
  339
  353
  368
  384
  401
  418
  437
  457
  478
  500
  523
  547
Total cash flow (excl. dividends), $m
  399
  419
  437
  455
  472
  490
  508
  526
  545
  565
  554
  575
  597
  619
  643
  668
  694
  721
  750
  781
  812
  846
  881
  918
  957
  998
  1,042
  1,087
  1,135
  1,185
Retained Cash Flow (-), $m
  -106
  -112
  -118
  -123
  -129
  -134
  -140
  -145
  -151
  -157
  -163
  -170
  -176
  -183
  -191
  -198
  -206
  -215
  -224
  -233
  -243
  -254
  -265
  -277
  -289
  -302
  -316
  -330
  -346
  -362
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  293
  307
  319
  331
  344
  356
  369
  381
  394
  408
  391
  405
  420
  436
  453
  470
  488
  507
  526
  547
  569
  592
  616
  642
  668
  696
  726
  757
  789
  824
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  280
  281
  278
  273
  266
  258
  249
  238
  226
  214
  186
  173
  160
  146
  133
  119
  106
  93
  81
  70
  59
  49
  40
  33
  26
  20
  16
  12
  9
  6
Current shareholders' claim on cash, %
  99.5
  99.1
  98.6
  98.2
  97.8
  97.5
  97.2
  96.8
  96.6
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3

Green Dot Corporation (Green Dot) is a pro-consumer financial technology innovator. The Company is a provider of reloadable prepaid debit cards and cash reload processing services in the United States. The Company operates through two segments: Account Services, and Processing and Settlement Services. The Company's account services segment includes branded deposit account programs, including Green Dot-branded and affinity-branded general purpose reloadable (GPR) card accounts; checking accounts, open-loop gift cards and secured credit cards. The Company's processing and settlement services include its money processing services, which consists of reload services and 1099 disbursements, and its tax refund processing services. It also has operations in the mobile technology and mobile banking with GoBank mobile checking account. Through its subsidiary, SBBT Holdings, LLC (TPG), it also operates as a processor of tax refund disbursements in the United States.

FINANCIAL RATIOS  of  Green Dot Corporation (GDOT)

Valuation Ratios
P/E Ratio 58.9
Price to Sales 3.4
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow 22.1
Price to Free Cash Flow 35.9
Growth Rates
Sales Growth Rate 3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -10.4%
Cap. Spend. - 3 Yr. Gr. Rate 3.6%
Financial Strength
Quick Ratio 1
Current Ratio 0.2
LT Debt to Equity 11.5%
Total Debt to Equity 122.7%
Interest Coverage 9
Management Effectiveness
Return On Assets 2.8%
Ret/ On Assets - 3 Yr. Avg. 2.9%
Return On Total Capital 2.8%
Ret/ On T. Cap. - 3 Yr. Avg. 3.3%
Return On Equity 6.2%
Return On Equity - 3 Yr. Avg. 6.8%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 18.4%
EBITDA Margin - 3 Yr. Avg. 18%
Operating Margin 8.9%
Oper. Margin - 3 Yr. Avg. 9.1%
Pre-Tax Margin 8.6%
Pre-Tax Margin - 3 Yr. Avg. 9.5%
Net Profit Margin 5.8%
Net Profit Margin - 3 Yr. Avg. 6.2%
Effective Tax Rate 32.3%
Eff/ Tax Rate - 3 Yr. Avg. 34.8%
Payout Ratio 0%

GDOT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GDOT stock intrinsic value calculation we used $1042 million for the last fiscal year's total revenue generated by Green Dot Corporation. The default revenue input number comes from 0001 income statement of Green Dot Corporation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our GDOT stock valuation model: a) initial revenue growth rate of 11.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for GDOT is calculated based on our internal credit rating of Green Dot Corporation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Green Dot Corporation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of GDOT stock the variable cost ratio is equal to 89%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for GDOT stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 9.2% for Green Dot Corporation.

Corporate tax rate of 27% is the nominal tax rate for Green Dot Corporation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the GDOT stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for GDOT are equal to 37.6%.

Life of production assets of 9.5 years is the average useful life of capital assets used in Green Dot Corporation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for GDOT is equal to -97.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $909.812 million for Green Dot Corporation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 52.937 million for Green Dot Corporation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Green Dot Corporation at the current share price and the inputted number of shares is $2.6 billion.

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