Critical Review: Global Payments (NYSE:GPN) and Green Dot (NYSE:GDOT)

Green Dot (NYSE:GDOT) and Global Payments (NYSE:GPN) are both business services companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, profitability, dividends, risk, valuation, earnings and institutional ownership.

Institutional & Insider Ownership

92.6% of Green Dot shares are held by institutional investors. Comparatively, 89.8% of Global Payments shares are held by institutional investors. 1.4% of Green Dot shares are held by company insiders. Comparatively, 1.0% of Global Payments shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Green Dot and Global Payments, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Green Dot	2	5	1	0	1.88
Global Payments	0	15	7	2	2.46

Green Dot presently has a consensus target price of $12.56, suggesting a potential downside of 0.06%. Global Payments has a consensus target price of $103.90, suggesting a potential upside of 35.32%. Given Global Payments’ stronger consensus rating and higher probable upside, analysts clearly believe Global Payments is more favorable than Green Dot.

Profitability

This table compares Green Dot and Global Payments’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Green Dot	-2.33%	9.81%	1.59%
Global Payments	15.07%	12.47%	5.97%

Valuation & Earnings

This table compares Green Dot and Global Payments”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Green Dot	$1.72 billion	0.40	-$26.70 million	($0.85)	-14.79
Global Payments	$10.08 billion	1.80	$1.57 billion	$7.12	10.78

Global Payments has higher revenue and earnings than Green Dot. Green Dot is trading at a lower price-to-earnings ratio than Global Payments, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Green Dot has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500. Comparatively, Global Payments has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500.

Summary

Global Payments beats Green Dot on 13 of the 15 factors compared between the two stocks.

About Green Dot

Green Dot Corporation, a financial technology and registered bank holding company, provides various financial services to consumers and businesses in the United States. It operates through three segments: Consumer Services, Business to Business Services, and Money Movement Services. The company provides deposit account programs, including consumer and small business checking account products, network-branded reloadable prepaid debit cards and gift cards, and secured credit programs. It offers money processing services, such as cash transfer services that enable consumers to deposit or pick up cash and pay bills with cash at the point-of-sale at any participating retailer; and simply paid disbursement services, which enable wages and authorized funds disbursement to its deposit account programs and accounts issued by any third-party bank or program manager. In addition, the company offers tax processing services comprising tax refund transfers, which provide the processing technology to facilitate receipt of a taxpayers' refund proceeds; small business lending to independent tax preparation providers that seek small advances; and fast cash advance, a loan that enables tax refund recipients. Green Dot Corporation was incorporated in 1999 and is headquartered in Austin, Texas.

About Global Payments

Global Payments Inc. provides payment technology and software solutions for card, check, and digital-based payments in the Americas, Europe, and the Asia-Pacific. It operates through two segments, Merchant Solutions and Issuer Solutions. The Merchant Solutions segment offers authorization, settlement and funding, customer support, chargeback resolution, terminal rental, sales and deployment, payment security, and consolidated billing and reporting services. This segment also provides an array of enterprise software solutions that streamline business operations of its customers in various vertical markets; and value-added solutions and services, such as point-of-sale software, analytics and customer engagement, payroll and reporting, and human capital management. The Issuer Solutions segment offers solutions that enable financial institutions and retailers to manage their card portfolios through a platform; and commercial payments, account payables, and electronic payment alternatives solutions for businesses and governments. It markets its products and services through direct sales force, trade associations, agent and enterprise software providers, referral arrangements with value-added resellers, and independent sales organizations. The company was founded in 1967 and is headquartered in Atlanta, Georgia.