Financial Analysis: Green Dot (NYSE:GDOT) vs. Paymentus (NYSE:PAY)

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

Institutional & Insider Ownership

92.6% of Green Dot shares are held by institutional investors. Comparatively, 78.4% of Paymentus shares are held by institutional investors. 1.4% of Green Dot shares are held by insiders. Comparatively, 75.4% of Paymentus shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Green Dot and Paymentus, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Green Dot	2	4	1	0	1.86
Paymentus	0	4	4	0	2.50

Green Dot presently has a consensus price target of $12.56, suggesting a potential upside of 3.25%. Paymentus has a consensus price target of $37.50, suggesting a potential upside of 26.76%. Given Paymentus’ stronger consensus rating and higher probable upside, analysts clearly believe Paymentus is more favorable than Green Dot.

Valuation & Earnings

This table compares Green Dot and Paymentus”s top-line 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	0.39	-$26.70 million	($0.85)	-14.31
Paymentus	$871.74 million	4.26	$44.17 million	$0.46	64.31

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

Profitability

This table compares Green Dot and Paymentus’ 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%
Paymentus	5.29%	12.68%	10.68%

Risk and Volatility

Green Dot has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, Paymentus has a beta of 1.49, suggesting that its stock price is 49% more volatile than the S&P 500.

Summary

Paymentus beats Green Dot on 12 of the 14 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 Paymentus

Paymentus Holdings, Inc. provides cloud-based bill payment technology and solutions in the United States and internationally. The company offers electronic bill presentment and payment services, enterprise customer communication, and self-service revenue management to billers through a software-as-a-service technology platform. Its platform's payment processing includes credit cards, debit cards, eChecks, and digital wallets. It serves utility, financial service, government, insurance, telecommunication, real estate management, education, consumer finance, healthcare, and small business industries. The company was founded in 2004 and is headquartered in Charlotte, North Carolina.