February 17, 2012
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 pre-paid debit card provider NetSpend Holdings (Nasdaq: NTSP ) are spiking 12% following its better-than-expected fourth-quarter earnings results.
So what: For the quarter, NetSpend reported a profit of $0.13 on revenue of $76.8 million. This compares to Wall Street's expectation of $0.12 on revenue of $77.6 million. NetSpend projects that in fiscal 2012 it will earn in the range of $0.51 to $0.55 on revenue of $338 million to $347 million, which is in line with estimates.
Now what: The real story here is that the number of cardholders with direct deposit volume rose 20% and gross dollar volume jumped $300 million to $2.8 billion. There's a huge market for consumers with poor credit and NetSpend's results show they are well on their way to tapping a good portion of it. Following strong results from the entire credit services sector, I don't see any reason why NetSpend's good fortune won't continue.
Craving more input? Start by adding NetSpend Holdings to your free and personalized watchlist so you can keep up on the latest news with the stock.