Please ensure Javascript is enabled for purposes of website accessibility

Green Dot Stock Could Shoot 56% Higher, Says Analyst

By Eric Volkman – Apr 18, 2021 at 10:48PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Craig-Hallum prognosticator Bradley Berning feels that the company's "boring" operations in particular are significantly undervalued.

One beaten-down financial services company is getting a little love from an analyst tracking the stock. On Friday, Green Dot (GDOT -0.25%) was the subject of a new, and very bullish, research note issued by Craig-Hallum prognosticator Bradley Berning. At is current level, the stock is undervalued by nearly 60%, Berning believes, and is well poised to spring higher. The analyst is reiterating his buy recommendation on Green Dot shares, and his $72 per share price target.

Green Dot is known for its prepaid debit cards, which are widely available in many retail stores and supermarkets. The company also operates as a bank, with a straightforward and low cost offering that targets first-time or otherwise unbanked individuals.

A customer and a merchant making a payment card transaction.

Image source: Getty Images.

The Craig-Hallum analyst argues that investors are not aware that the company's "boring" business is full of potential. One aspect of its operations is its Reload Network, within which debit card holders can "refill" the amounts packed into their plastic. They can do so at a vast number of registers at the company's partner retailers, one reason why Berning feels that this business alone is worth a minimum of $1 billion (in its entirety, Green Dot's market capitalization is just over $2.5 billion).

Meanwhile, other Green Dot operations are headed north. For example, the analyst expects that the number of cash transfers through the company's network will improve at a 4% compound annual growth rate (CAGR) through 2025. The market is not taking into account this kind of trajectory, Berning believes.

"Excluding the reload network, investors are effectively buying the rest of the business at 6 [times] EV/EBITDA, despite key metrics trending in a positive direction and a long list of future growth opportunities, he wrote in his note.


Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Green Dot. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Green Dot Corporation  Stock Quote
Green Dot Corporation
$19.95 (-0.25%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.